SEC Won't Modify Texting Settlements for LPL, Raymond James, 14 Others

"Even if that were so," the SEC said in its order, "it would not be a basis for modifying" the settlement orders. The SEC said that it was also unpersuaded by the firms’ "claims that they are, in effect, being penalized for settling earlier than other respondents."

The commission "has long rejected motions to modify or vacate settled orders simply because respondents seek to bring their terms in line with sanctions imposed on other parties," the order states. "Courts have done the same."

In denying the requests, the SEC also emphasized a "strong interest" in maintaining settlement finality. The majority opinion emphasized that settlement decisions always involve risk calculations, and "settlor's remorse" doesn't justify reopening agreed-upon terms.

Other firms requesting modifications were:

• William Blair & Co. L.L.C. and William Blair Investment Management LLC
• Robert W. Baird & Co.
• Key Investment Services LLC and KeyBanc Capital Markets Inc.
• Oppenheimer & Co. Inc.
• Hilltop Securities Inc.
• Piper Sandler & Co.
• Apex Clearing Corp.
• Truist Securities Inc., Truist Investment Services Inc. and Truist Advisory Services
• RBC Capital Markets
• Regions Securities LLC
• Invesco Distributors Inc. and Invesco Advisers Inc.;
• Stifel, Nicolaus & Co. Inc.

In 2023, Robert W. Baird & Co. agreed to pay a $15 million penalty and William Blair agreed to pay a $10 million penalty. In 2024, Oppenheimer & Co. Inc. agreed to pay a $12 million penalty while Key Investment Services agreed to pay $10 million. Later in 2024, Ameriprise, LPL Financial and Raymond James each agreed to pay $50 million penalties, while RBC Capital Markets agreed to pay a $45 million penalty.

Peirce Dissents

In a dissent, SEC Commissioner Hester Peirce stated that the firms were being unfairly treated compared with later settlements and that the agency should have modified the orders.

"Under the unique circumstances here, the Commission should take the unusual but warranted step of modifying" the settled orders, Peirce said.

The violations, Peirce continued in her dissent, "trigger certain statutory disqualifications. Those statutory disqualifications, in turn, render Respondents disqualified from FINRA membership. To maintain their FINRA membership while the sanctions imposed in the order triggering the statutory disqualification are in effect, Respondents must file an application for continuing membership with FINRA’s Department of Registration and Disclosure."

As part of the application and approval process, the 16 firms "are required to submit and adhere to a plan of heightened supervision, a process that imposes significant costs," Peirce stated.

One firm contends, for example, "that the typical heightened supervision plan 'require[s], among other things, costly and burdensome training, disclosures, and recordkeeping not otherwise required by the Commission’s undertakings, with ongoing examination and supervision by FINRA for a period of six additional years,'” Peirce pointed out.

"Notably, the Division of Enforcement does not contest the assertion — made by nearly all the Respondents at issue here — that FINRA’s heightened supervision plans impose costly obligations that go beyond the Commission’s requirements in the undertakings," Peirce said.