SEC Fines Guggenheim Securities $209,000 for Alleged Whistleblower Protection Violations
The Securities and Exchange Commission has charged Guggenheim Securities with allegedly violating whistleblower protection rules over language included in its employee compliance manual.
The Securities and Exchange Commission has charged Guggenheim Securities with allegedly violating whistleblower protection rules over language included in its employee compliance manual, the regulator announced on Wednesday.
According to the SEC’s order, from at least April 2016 to July 2020, Guggenheim’s compliance manual stated that employees were “strictly prohibited from initiating contact with any regulator without prior approval from the legal or compliance department.”
“This prohibition applies to any subject matter that might be discussed with a regulator, including an individual’s registration status with FINRA,” the manual stated. “Any employee that violates this policy may be subject to disciplinary action by the firm.”
Employees were asked to sign an acknowledgement, upon hire and on an annual basis, that they had received, read, and would adhere to the manual. In addition, the SEC claims that the firm provided annual employee compliance training in 2018 and 2019 that included similar language.
The regulators found that Guggenheim Securities “willfully violated” Section 21F of the Exchange Act, which states that “no person may take any action to impede an individual from communicating directly with the [SEC] about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.”
However, the SEC noted that it was unaware of any specific instances where an employee was prevented from communicating with its staff.
After being contacted by the SEC, Guggenheim reportedly revised the compliance manual and added language advising employees of their right to contact regulators with concerns about potential legal or regulatory violations. The firm communicated the revisions to its employees through a compliance alert, the regulator said.
Without admitting or denying the SEC’s findings, the New York-based broker-dealer agreed to a censure and $209,000 civil penalty. Guggenheim Securities has more than 600 registered representatives and 16 branches.
