Three
Northwestern Mutual subsidiaries will pay a $16.5 million civil penalty after the Securities and Exchange Commission discovered recordkeeping violations committed within each entity.
The three Northwestern Mutual subsidiaries that have violated recordkeeping provisions are Northwestern Mutual Investment Services LLC (NMIS), Northwestern Mutual Investment Management Co. LLC (NMIM) and Mason Street Advisors LLC.
Specifically, each subsidiary, along with its employees, failed to maintain and preserve certain electronic communications, according to a press release from the SEC.
The SEC discovered "pervasive and longstanding" uses of unapproved communication methods, called off-channel communications, at each firm. The firms admitted that from 2019 to 2020, their employees communicated via text about Northwestern Mutual’s business operations. The firms did not keep the majority of these off-channel communications, in violation of the federal securities laws.
"By failing to maintain and preserve required records, some of the firms likely deprived the SEC of these off-channel communications in various SEC investigations," according to the press release. "The failures involved employees at multiple levels of authority, including supervisors and senior managers."
U.S. Bancorp Investments Inc. has also agreed to pay an $8 million penalty stemming from recordkeeping violations.
In addition to the financial penalty, each firm agreed to hire compliance consultants who will review each entities' policies and procedures related to electronic communications.
The SEC has taken continual action against businesses as part of a larger effort to uphold recordkeeping requirements. Last October, Milwaukee-based financial services firm Baird
agreed to pay a $15 million penalty following similar recordkeeping violations that were discovered by the SEC.
