Off-Channel Communications After 2024: The Last SEC Round and What Followed
Updated October 2026. First published October 2024.
The SEC's off-channel communications sweep began with JPMorgan's $125 million settlement in December 2021. By October 2024, according to Commissioner Hester Peirce, it had produced settlements with more than 100 firms and $2 billion in penalties. The last round came on January 13, 2025. A search of the SEC's press releases for recordkeeping cases turns up nothing newer as of October 2026.
What's happened since is about the terms of those settlements and about FINRA's rules. Firms that settled before 2025 carry heavier undertakings than the last group did, and the SEC refused to change that. FINRA eased its side of the consequences and asked whether its rules on digital communications need updating. Our post on the February 2024 round covers what the earlier orders found. This post covers what came after.
The Last Round: January 2025
On January 13, 2025, twelve firms (nine investment advisers and three broker-dealers) agreed to pay $63.1 million combined (SEC press release 2025-6). They admitted the facts in their orders and acknowledged that the conduct violated the recordkeeping provisions. The SEC censured them and ordered them to cease and desist, and it also found they had failed to reasonably supervise.
| Firm | Penalty |
|---|---|
| Blackstone Alternative Credit Advisors, Blackstone Management Partners, and Blackstone Real Estate Advisors | $12 million |
| Kohlberg Kravis Roberts & Co. | $11 million |
| Charles Schwab & Co. | $10 million |
| Apollo Capital Management | $8.5 million |
| Carlyle Investment Management, Carlyle Global Credit Investment Management, and AlpInvest Partners | $8.5 million |
| TPG Capital Advisors | $8.5 million |
| Santander US Capital Markets | $4 million |
| PJT Partners | $600,000 |
PJT Partners self-reported. The SEC said its penalty was significantly lower than it would otherwise have been.
The undertakings changed more than the penalties did. The typical earlier order required a firm to hire an independent compliance consultant for a review lasting about two years, adopt its recommendations, report to the SEC for two years on discipline of employees who broke the communications policies, and keep records of compliance for six years. The SEC ordered firms to comply. Peirce wrote that the January 2025 orders required only an internal audit by the firm, dropped the discipline reports, and left compliance with the undertakings voluntary.
The SEC Said No to Equal Terms
That last difference matters for broker-dealers. The violations made each settling firm statutorily disqualified. While an ordered undertaking is still running, the sanction is in effect, and a FINRA member in that position has to apply to FINRA to continue its membership and accept a heightened supervision plan. FINRA says 77 member firms settled off-channel cases with the SEC from 2021 to 2024 on largely identical terms and went through that process. The January 2025 settlers didn't have to, because their undertakings weren't ordered.
Firms covered by sixteen orders entered between September 2023 and September 2024 asked the SEC to equalize their terms: replace the consultant with a one-time internal audit, drop the discipline reporting, and remove the order to comply. None of the requests asked to cut the penalties. On April 14, 2025, the Commission denied the motions (Release No. 34-102860). It held that a later party getting better terms isn't the kind of significant change in circumstances that justifies modifying a settled order.
On June 26, 2025, it denied the same motions from the firms in five more orders (Release No. 34-103330). That order rejected Perella Weinberg's argument that, as the first firm to self-report, it deserved better terms than the January 2025 group. Peirce dissented both times. She would have made the undertakings voluntary in all the orders.
FINRA Changed the Supervision Plans
On May 8, 2025, FINRA's chief executive Robert Cook and Greg Ruppert, its executive vice president for Member Supervision, said FINRA would amend the heightened supervision plans for the firms that settled before 2025 (FINRA blog). The amended plans would focus on completing the SEC undertakings and giving FINRA copies of the certifications the firms make to the SEC. FINRA said its rules didn't let it drop the plans entirely or put those firms in the same position as the January 2025 settlers.
FINRA Asked Whether the Rules Should Change
In April 2025, Regulatory Notice 25-07 asked for comment on modernizing FINRA rules for how member workplaces operate, including digital communications. FINRA wrote that associated persons do business on channels their firm hasn't approved, so the firm doesn't keep or supervise those messages. It asked which supervision approaches have worked for different channels, including off-channel communications, and whether some kinds of records cost a lot to capture for little regulatory benefit.
The notice also pointed out that Rule 17a-4(b)(4) covers communications relating to the firm's business as such, and that the rule doesn't define the phrase. It asked about records created by AI tools, such as chatbot output and meeting transcripts or summaries. The comment period closed on July 14, 2025. FINRA said any rule change would go through its normal rulemaking process, with a filing at the SEC.
What Hasn't Changed
The requirement is the same. Rule 17a-4(b)(4) still requires a broker-dealer to keep originals of the communications it receives and copies of those it sends relating to its business as such, for at least three years, the first two in an easily accessible place. FINRA still brings its own recordkeeping cases. On October 8, 2025, it fined Ally Invest Securities $850,000 for failing to preserve at least 22.6 million business-related electronic communications from September 2016 to November 2022 (AWC No. 2021071257201). Ally had found and self-reported every issue before any regulator did, and FINRA credited it for extraordinary cooperation. We wrote about that case in The Recordkeeping Gap.
What to Check Now
- If you settled with the SEC before 2025, put the remaining undertaking dates and your amended heightened supervision plan on one calendar, with an owner for each certification.
- Ask the people who text most, supervisors included, which apps they use with clients and counterparties. Compare the answers with what your archive captures.
- Pick a trade from 18 months ago and try to produce every message about it. Time how long it takes.
- Decide whether output from AI notetakers and chatbots relates to your business as such, and write the decision into your procedures. FINRA raised the question in Notice 25-07.
- Test capture after every system change. When Ally Invest moved to a new records-retention system, the feature that copied certain messages to a dedicated mailbox was deleted, and those messages stopped being kept.
If you'd like an outside review of how your firm captures and supervises email, messaging, voice, and collaboration tools, that's part of Loffa's Compliance Consulting Services (CCS).
This post is for informational purposes only and does not constitute legal advice. For guidance on specific regulatory obligations, consult your counsel or compliance advisor.