The United States Securities and Exchange Commission (SEC) today announced settled charges against a New York-based registered broker-dealer, Guggenheim Securities, LLC, for violating a whistleblower protection rule. The rule in question prohibits taking any action to impede an individual from communicating directly with SEC staff about a possible securities law violation.
The SEC’s order finds that, from at least 2016 to 2020, Guggenheim’s Core Compliance Manual prohibited its employees from initiating contact with any regulator, including the SEC, without prior approval from the firm’s legal or compliance department. The order also finds that, in 2018 and 2019, Guggenheim provided annual compliance training to its employees that included similar language.
GS Manual contained a “Communications with Regulators” section that stated, in relevant part:
Employees are also 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. Any employee that violates this policy may be subject to disciplinary action by the Firm.
According to the order, after SEC staff contacted Guggenheim in this matter, the firm revised the manual by removing the language prohibiting employees from contacting regulators without approval, and adding language affirmatively advising employees of their right to contact regulators with concerns about potential legal or regulatory violations.
The SEC’s order finds that Guggenheim willfully violated Rule 21F-17 of the Securities Exchange Act of 1934. Guggenheim has agreed, without admitting or denying the SEC’s findings, to a cease-and-desist order, a censure, and a civil penalty in the amount of $208,912.
