In re Canaccord Genuity LLC

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101142 / September 24, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22166 
 
 
In the Matter of 
 
Canaccord Genuity LLC,  
 
Respondent. 
ORDER INSTITUTING 
ADMINISTRATIVE AND CEASE-AND-
DESIST PROCEEDINGS, PURSUANT TO 
SECTIONS 15(b) AND 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-
AND-DESIST ORDER 
 
I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 
the public interest that public administrative and cease-and-desist proceedings be, and hereby 
are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 
(“Exchange Act”) against Canaccord Genuity LLC (“Respondent” or “Canaccord”). 
 
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 
facts set forth in Section III below, acknowledges that its conduct violated the federal securities 
laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 
Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, 
and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on broker-dealers 
to ensure that they responsibly discharge their crucial role in our markets.  The Commission has 
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

2 
 
long said that compliance with these requirements is essential to investor protection and the 
Commission’s efforts to further its mandate of protecting investors, maintaining fair, orderly, and 
efficient markets, and facilitating capital formation.   
2. These proceedings arise out of Canaccord’s identification – and self-report – of 
widespread failures of Canaccord personnel, including at senior levels, to adhere to certain of 
these essential requirements and Canaccord’s own policies and procedures.  Using their personal 
devices, Canaccord’s personnel communicated both internally and externally by text messages, 
and/or other unapproved written communications platforms, such as WhatsApp (“off-channel 
communications”). 
3. Canaccord conducted an internal investigation and self-reported the facts to the 
Commission staff.  Canaccord proactively identified key facts which assisted the Commission 
staff in efficiently investigating the conduct.  Prior to contacting the Division of Enforcement, 
Canaccord undertook significant remedial measures relating to its recordkeeping practices and 
policies and procedures, including offering various technologies to personnel, such as firm 
devices and the option to utilize their own devices with compliant text message capture.  
4. From at least January 2020 (the “Relevant Period”), Canaccord’s personnel sent 
and received off-channel communications that related to its broker-dealer business.  Respondent 
did not maintain or preserve the substantial majority of these written communications.  
Canaccord’s failure was firm-wide and involved personnel at various levels of authority.  As a 
result, Canaccord violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder. 
5. Canaccord’s supervisors, who were responsible for supervising junior personnel, 
routinely communicated off-channel using their personal devices.  In fact, managing directors 
responsible for supervising junior personnel themselves failed to comply with Canaccord’s 
policies and procedures by communicating through non-Canaccord approved methods on their 
personal devices about Canaccord’s broker-dealer business. 
6. Canaccord’s widespread failure to implement its policies and procedures that 
prohibit such communications led to its failure to reasonably supervise its personnel within the 
meaning of Section 15(b)(4)(E) of the Exchange Act.    
7. During the Relevant Period, Canaccord received and responded to Commission 
subpoenas for documents and records requests in various Commission investigations.  As a 
result, Canaccord’s recordkeeping failures likely impacted the Commission’s ability to carry out 
its regulatory functions and investigate violations of the federal securities laws across these 
investigations.   
8. After Canaccord initiated a review of its recordkeeping failures, Canaccord 
identified failures and self-reported its conduct, and further enhanced its ongoing program of 
remediation.  As set forth in the Undertakings below, Canaccord will retain an independent 
compliance consultant to review and assess Canaccord’s remedial steps relating to its 
recordkeeping practices, policies and procedures, related supervisory practices, and employment 
actions. 

3 
 
Respondent 
9. Canaccord Genuity LLC is a New York corporation with its principal office in New 
York, and has been registered with the Commission as a broker-dealer since 1953.  It is an indirect 
wholly-owned subsidiary of Canaccord Genuity Group Inc., whose corporate headquarters is 
located in Vancouver, British Columbia, Canada.  
Recordkeeping Requirements Under the Exchange Act 
10. Section 17(a)(1) of the Exchange Act authorizes the Commission to issue rules 
requiring broker-dealers to make and keep for prescribed periods, and furnish copies of, such 
records as necessary or appropriate in the public interest, for the protection of investors or 
otherwise in furtherance of the purposes of the Exchange Act. 
11. The Commission adopted Rule 17a-4 under the Exchange Act pursuant to this 
authority.  Rule 17a-4 specifies the manner and length of time that the records made in 
accordance with other Commission rules, and certain other records made by broker-dealers, must 
be maintained and produced promptly to Commission representatives.   
12. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 
17a-4(b)(4), require that broker-dealers preserve for at least three years, the first two years in an 
easily accessible place, originals of all communications received and copies of all written 
communications sent relating to the broker-dealer’s business as such.  These rules impose 
minimum recordkeeping requirements that are based on standards a prudent broker-dealer should 
follow in the normal course of business.  
13. The Commission previously has stated that these and other recordkeeping 
requirements “are an integral part of the investor protection function of the Commission, and 
other securities regulators, in that the preserved records are the primary means of monitoring 
compliance with applicable securities laws, including antifraud provisions and financial 
responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 
Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 
with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 
Canaccord’s Policies and Procedures 
14. Canaccord maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions.   
15. Canaccord personnel were advised that the use of unapproved electronic 
communications methods, including on their personal devices, was not permitted, and they 
should not use personal email, chats or text messaging applications for business purposes, or 
forward work-related communications to unapproved applications on their personal devices.  
16. Messages sent through firm-approved communications methods were monitored, 
subject to review, and archived.  Messages sent through unapproved communications methods, 

4 
 
such as WhatsApp and other unapproved applications on personal devices, were not monitored, 
subject to review or archived. 
17. Canaccord policies and procedures were designed to address supervisors’ 
supervision of personnel’s training in Canaccord’s communications policies and adherence to 
Canaccord’s books and recordkeeping requirements.  Supervisory policies notified personnel that 
electronic communications were subject to surveillance by Canaccord.  Canaccord had 
procedures for all personnel, including supervisors, requiring annual, and later quarterly, self-
attestations of compliance.  
18. Canaccord, however, failed to implement a system reasonably expected to 
determine whether all personnel, including supervisors, were following Canaccord’s policies and 
procedures.  While permitting personnel to use approved communications methods, including on 
personal phones, for business communications, Canaccord failed to implement sufficient 
monitoring to ensure that its recordkeeping and communications policies were being followed.  
Canaccord’s Recordkeeping Failures Across Its Brokerage Business 
19. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  In December 2023, Canaccord voluntarily contacted staff 
regarding certain off-channel communications that it had identified related to its business.  
Canaccord cooperated with the staff’s investigation by proactively gathering communications 
from the personal devices of its personnel.  As reported to the Commission staff, Canaccord 
personnel who had engaged in the use of off-channel communications included senior managers 
across the firm.  
20. Canaccord’s investigation uncovered pervasive off-channel communications at all 
seniority levels of Canaccord.  The investigation determined that all broker-dealer personnel 
sampled had engaged in at least some level of off-channel communications.  Overall, personnel 
sent and received numerous off-channel communications, involving other Canaccord personnel, 
and Canaccord’s customers, investors, and/or other participants in the securities industry.  Within 
Canaccord, significant numbers of senior personnel participated in off-channel communications. 
21. During the Relevant Period, Canaccord personnel sent and received off-channel 
messages that concerned its broker-dealer’s business. 
22. For example, a managing director exchanged numerous off-channel business-
related messages with at least 13 Canaccord colleagues, including exchanging text messages 
with managing directors and junior personnel under their supervision, and 165 customers, 
investors, or other market participants.  These messages related to the broker-dealer’s business as 
such.  
23. In addition, a managing director exchanged numerous off-channel business-
related messages with at least 26 Canaccord colleagues, including exchanging text messages 
with executives, heads of desks, and junior personnel under their supervision, and 69 customers, 

5 
 
investors, or other market participants.  These messages related to the broker-dealer’s business as 
such.  
24. Furthermore, a managing director exchanged numerous off-channel business-
related messages with at least 24 Canaccord colleagues, including exchanging text and 
WhatsApp messages with managing directors and a senior managing director, one individual at 
another financial services firm, and 32 customers, investors, or other market participants.  These 
messages related to the broker-dealer business as such.  
Canaccord’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
25. During the Relevant Period, Canaccord received and responded to Commission 
subpoenas for documents and records requests in various Commission investigations.  By failing 
to maintain and preserve required records relating to its broker-dealer business, Canaccord likely 
deprived the Commission of these off-channel communications in various investigations. 
 
Canaccord’s Violations and Failure to Supervise 
26. As a result of the conduct described above, Respondent willfully
2
 violated Section 
17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder. 
 
27. As a result of the conduct described above, Respondent failed reasonably to 
supervise its personnel with a view to preventing or detecting certain of its supervised persons’ 
aiding and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) 
thereunder, within the meaning of Section 15(b)(4)(E) of the Exchange Act.  
Canaccord’s Self-Reporting, Cooperation, and Remediation 
28. In determining to accept the Offer, the Commission considered Canaccord’s self-
report, cooperation afforded to the Commission staff, and remediation.  Canaccord conducted an 
internal investigation and self-reported the facts to the Commission staff.  Prior to and after 
approaching the Commission staff, Canaccord enhanced policies and procedures, increased 
training concerning the use of approved communications methods, including on personal 
devices, gave employees the option to utilize their personal devices with compliant text message 
capture, enhanced communication surveillance to seek to better identify possible off-channel 
communications, and began and continued to implement significant changes to the technology 
available to personnel, which included providing personnel with the option of using firm-issued 
devices, thereby making approved channels more readily available.  
 
2
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act, 
“‘means no more than that the person charged with the duty knows what he is doing.’”  
Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 
977 (D.C. Cir. 1949)).  

6 
 
Undertakings 
Respondent has undertaken to: 
 
29. Independent Compliance Consultant. 
a.  Canaccord shall retain, within thirty (30) days of the entry of this Order, the 
services of an independent compliance consultant (“Compliance Consultant”) that is not 
unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 
expenses shall be borne exclusively by Canaccord. 
 
b.  Canaccord will oversee the work of the Compliance Consultant. 
 
c.  Canaccord shall provide to the Commission staff, within sixty (60) days of the 
entry of this Order, a copy of the engagement letter detailing the Compliance 
Consultant’s responsibilities, which shall include a comprehensive compliance review as 
described below.  Canaccord shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 
 
i.  A comprehensive review of Canaccord’s supervisory, compliance, and 
other policies and procedures designed to ensure that Canaccord’s electronic 
communications, including those found on personal electronic devices, including 
without limitation, cellular phones (“Personal Devices”), are preserved in 
accordance with the requirements of the federal securities laws. 
 
ii.  A comprehensive review of training conducted by Canaccord to ensure 
personnel are complying with the requirements regarding the preservation of 
electronic communications, including those found on Personal Devices, in 
accordance with the requirements of the federal securities laws, including by 
ensuring that Canaccord personnel certify in writing on a quarterly basis that they 
are complying with preservation requirements.  
 
iii.  An assessment of the surveillance program measures implemented by 
Canaccord to ensure compliance, on an ongoing basis, with the requirements 
found in the federal securities laws to preserve electronic communications, 
including those found on Personal Devices. 
 
iv.  An assessment of the technological solutions that Canaccord has 
begun implementing to meet the record retention requirements of the federal 
securities laws, including an assessment of the likelihood that Canaccord 
personnel will use the technological solutions going forward and a review of the 
measures employed by Canaccord to track employee usage of new technological 
solutions.  
 
v.  An assessment of the measures used by Canaccord to prevent the use of 
unauthorized communications methods for business communications by 

7 
 
personnel.  This assessment should include, but not be limited to, a review of 
Canaccord’s policies and procedures to ascertain if they provide for any 
significant technology and/or behavioral restrictions that help prevent the risk of 
the use of unapproved communications methods on Personal Devices (e.g., 
trading floor restrictions).   
 
vi.  A review of Canaccord’s electronic communications surveillance 
routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into 
Canaccord’s overall communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Canaccord to 
address instances of non-compliance by Canaccord personnel with Canaccord’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Canaccord business in the past.  This review shall include a survey of how 
Canaccord determined which personnel failed to comply with Canaccord’s 
policies and procedures, the corrective action carried out, an evaluation of who 
violated the policies and procedures and why, what penalties were imposed, and 
whether penalties were handed out consistently across business lines and seniority 
levels.   
 
d.  Canaccord shall require that, within forty-five (45) days after completion of 
the review set forth in sub-paragraphs 29.c.i. through c.vii. above, the Compliance 
Consultant shall submit a detailed written report of its findings to Canaccord and to the 
Commission staff (the “Report”).  Canaccord shall require that the Report include a 
description of the review performed, the names of the individuals who performed the 
review, the conclusions reached, the Compliance Consultant’s recommendations for 
changes in or improvements to Canaccord’s policies and procedures, and a summary of 
the plan for implementing the recommended changes in or improvements to Canaccord’s 
policies and procedures. 
 
e.  Canaccord shall adopt all recommendations contained in the Report within 
ninety (90) days of the date of the Report; provided, however, that within forty-five (45) 
days after the date of the Report, Canaccord shall advise the Compliance Consultant and 
the Commission staff in writing of any recommendations that Canaccord considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Canaccord considers unduly burdensome, impractical, or inappropriate, Canaccord 
need not adopt such recommendation at that time, but shall propose in writing an 
alternative policy, procedure, or disclosure designed to achieve the same objective or 
purpose. 
 
f.  As to any recommendation concerning Canaccord’s policies or procedures on 
which Canaccord and the Compliance Consultant do not agree, Canaccord and the 
Compliance Consultant shall attempt in good faith to reach an agreement within sixty 
(60) days after the date of the Report.  Within fifteen (15) days after the conclusion of the 
discussion and evaluation by Canaccord and the Compliance Consultant, Canaccord shall 

8 
 
require that the Compliance Consultant inform Canaccord and the Commission staff in 
writing of the Compliance Consultant’s final determination concerning any 
recommendation that Canaccord considers to be unduly burdensome, impractical, or 
inappropriate.  Canaccord shall abide by the determinations of the Compliance 
Consultant and, within sixty (60) days after final agreement between Canaccord and the 
Compliance Consultant or final determination by the Compliance Consultant, whichever 
occurs first, Canaccord shall adopt and implement all of the recommendations that the 
Compliance Consultant deems appropriate. 
 
g.  Canaccord shall cooperate fully with the Compliance Consultant and shall 
provide the Compliance Consultant with access to such of Canaccord’s files, books, 
records, and personnel as are reasonably requested by the Compliance Consultant for 
review. 
 
h.  Canaccord shall not have the authority to terminate the Compliance Consultant 
or substitute another compliance consultant for the initial Compliance Consultant, 
without the prior written approval of the Commission staff.  Canaccord shall compensate 
the Compliance Consultant and persons engaged to assist the Compliance Consultant for 
services rendered under this Order at their reasonable and customary rates. 
 
i.  For the period of engagement and for a period of two (2) years from 
completion of the engagement, Respondent shall not (i) retain the Compliance Consultant 
for any other professional services outside of the services described in this Order; (ii) 
enter into any other professional relationship with the Compliance Consultant, including 
any employment, consultant, attorney-client, auditing or other professional relationship; 
or (iii) enter, without prior written consent of the Commission staff, into any such 
professional relationship with any of the Compliance Consultant’s present or former 
affiliates, employers, directors, officers, employees, or agents.  
 
j.  The Report by the Compliance Consultant will likely include confidential 
financial, proprietary, competitive business or commercial information.  Public disclosure 
of the Report could discourage cooperation, impede pending or potential government 
investigations or undermine the objectives of the reporting requirement.  For these 
reasons, among others, the Report and the contents thereof are intended to remain and 
shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 
in writing, (3) to the extent that the Commission determines in its sole discretion that 
disclosure would be in furtherance of the Commission’s discharge of its duties and 
responsibilities, or (4) as otherwise required by law. 
 
30. One-Year Evaluation.  Canaccord shall require the Compliance Consultant to 
assess Canaccord’s program for the preservation, as required under the federal securities laws, of 
electronic communications, including those found on Personal Devices, commencing one year 
after submitting the Report required by Paragraph 29.d above.  Canaccord shall require this 
review to evaluate Canaccord’s progress in the areas described in Paragraphs 29.c.i-vii above.  
After this review, Canaccord shall require the Compliance Consultant to submit a report (the 
“One Year Report”) to Canaccord and the Commission staff and shall ensure that the One Year 

9 
 
Report includes an updated assessment of Canaccord’s policies and procedures with regard to the 
preservation of electronic communications (including those found on Personal Devices), training, 
surveillance programs, and technological solutions implemented in the prior year period.  
31. Reporting Discipline Imposed.  For two (2) years following the entry of this Order, 
Canaccord shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Canaccord, including, but not limited to: written warnings; loss of any pay, bonus, or 
incentive compensation; or the termination of personnel; with respect to any employee found to 
have violated Canaccord’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices: at least forty-eight (48) hours before 
the filing of a Form U5, or within ten (10) days of the imposition of other discipline.   
32. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Canaccord will also have its Internal Audit function conduct a separate 
audit(s) to assess Canaccord’s progress in the areas described in Paragraphs 29.c.i-vii above.  After 
completion of this audit(s), Canaccord shall ensure that Internal Audit submits a report to 
Canaccord and to the Commission staff. 
33. Recordkeeping.  Canaccord shall preserve, for a period of not less than six (6) 
years from the end of the fiscal year last used, the first two (2) years in an easily accessible place, 
any record of compliance with these undertakings. 
34. Deadlines.  For good cause shown, the Commission staff may extend any of the 
procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 
calendar days, except that if the last day falls on a weekend or federal holiday, the next business 
day shall be considered to be the last day. 
35. Certification.  Canaccord shall certify, in writing, compliance with the 
undertakings set forth above.  The certification shall identify the undertakings, provide written 
evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 
demonstrate compliance.  The Commission staff may make reasonable requests for further 
evidence of compliance, and Respondent agrees to provide such evidence.  The certification and 
supporting material shall be submitted to Alison R. Levine, Assistant Regional Director, 
Division of Enforcement, New York Regional Office, Securities and Exchange Commission, 100 
Pearl Street, Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission 
staff may request, with a copy to the Office of Chief Counsel of the Enforcement Division, no 
later than sixty (60) days from the date of the completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondent’s Offer. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 
ORDERED that: 
 

10 
 
 A. Respondent cease and desist from committing or causing any violations and any 
future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 
 
B. Respondent is censured.  
 
C. Respondent shall comply with the undertakings enumerated in paragraphs 29 to 
35 above. 
  
 D. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $1,250,000 to the Securities and Exchange Commission for transfer to 
the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 
timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
 
 Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Canaccord as a Respondent in these proceedings, and the file number of these proceedings; a 
copy of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., 
Associate Regional Director, Securities and Exchange Commission, 100 Pearl Street, Suite 20-
100, New York, New York 10004-2616.   
 
 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 

11 
 
of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101142 / September 24, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22166 

 

 

In the Matter of 

 

Canaccord Genuity LLC,  

 

Respondent. 

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-AND-

DESIST PROCEEDINGS, PURSUANT TO 

SECTIONS 15(b) AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-

AND-DESIST ORDER 

 

I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate and in 

the public interest that public administrative and cease-and-desist proceedings be, and hereby 

are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 

(“Exchange Act”) against Canaccord Genuity LLC (“Respondent” or “Canaccord”). 

 

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (“Offer”) that the Commission has determined to accept.  Respondent admits the 

facts set forth in Section III below, acknowledges that its conduct violated the federal securities 

laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 

consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, 

Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, 

and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   

 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

Summary 

1. The federal securities laws impose recordkeeping requirements on broker-dealers 

to ensure that they responsibly discharge their crucial role in our markets.  The Commission has 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.  



2 

 

long said that compliance with these requirements is essential to investor protection and the 

Commission’s efforts to further its mandate of protecting investors, maintaining fair, orderly, and 

efficient markets, and facilitating capital formation.   

2. These proceedings arise out of Canaccord’s identification – and self-report – of 

widespread failures of Canaccord personnel, including at senior levels, to adhere to certain of 

these essential requirements and Canaccord’s own policies and procedures.  Using their personal 

devices, Canaccord’s personnel communicated both internally and externally by text messages, 

and/or other unapproved written communications platforms, such as WhatsApp (“off-channel 

communications”). 

3. Canaccord conducted an internal investigation and self-reported the facts to the 

Commission staff.  Canaccord proactively identified key facts which assisted the Commission 

staff in efficiently investigating the conduct.  Prior to contacting the Division of Enforcement, 

Canaccord undertook significant remedial measures relating to its recordkeeping practices and 

policies and procedures, including offering various technologies to personnel, such as firm 

devices and the option to utilize their own devices with compliant text message capture.  

4. From at least January 2020 (the “Relevant Period”), Canaccord’s personnel sent 

and received off-channel communications that related to its broker-dealer business.  Respondent 

did not maintain or preserve the substantial majority of these written communications.  

Canaccord’s failure was firm-wide and involved personnel at various levels of authority.  As a 

result, Canaccord violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder. 

5. Canaccord’s supervisors, who were responsible for supervising junior personnel, 

routinely communicated off-channel using their personal devices.  In fact, managing directors 

responsible for supervising junior personnel themselves failed to comply with Canaccord’s 

policies and procedures by communicating through non-Canaccord approved methods on their 

personal devices about Canaccord’s broker-dealer business. 

6. Canaccord’s widespread failure to implement its policies and procedures that 

prohibit such communications led to its failure to reasonably supervise its personnel within the 

meaning of Section 15(b)(4)(E) of the Exchange Act.    

7. During the Relevant Period, Canaccord received and responded to Commission 

subpoenas for documents and records requests in various Commission investigations.  As a 

result, Canaccord’s recordkeeping failures likely impacted the Commission’s ability to carry out 

its regulatory functions and investigate violations of the federal securities laws across these 

investigations.   

8. After Canaccord initiated a review of its recordkeeping failures, Canaccord 

identified failures and self-reported its conduct, and further enhanced its ongoing program of 

remediation.  As set forth in the Undertakings below, Canaccord will retain an independent 

compliance consultant to review and assess Canaccord’s remedial steps relating to its 

recordkeeping practices, policies and procedures, related supervisory practices, and employment 

actions. 



3 

 

Respondent 

9. Canaccord Genuity LLC is a New York corporation with its principal office in New 

York, and has been registered with the Commission as a broker-dealer since 1953.  It is an indirect 

wholly-owned subsidiary of Canaccord Genuity Group Inc., whose corporate headquarters is 

located in Vancouver, British Columbia, Canada.  

Recordkeeping Requirements Under the Exchange Act 

10. Section 17(a)(1) of the Exchange Act authorizes the Commission to issue rules 

requiring broker-dealers to make and keep for prescribed periods, and furnish copies of, such 

records as necessary or appropriate in the public interest, for the protection of investors or 

otherwise in furtherance of the purposes of the Exchange Act. 

11. The Commission adopted Rule 17a-4 under the Exchange Act pursuant to this 

authority.  Rule 17a-4 specifies the manner and length of time that the records made in 

accordance with other Commission rules, and certain other records made by broker-dealers, must 

be maintained and produced promptly to Commission representatives.   

12. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 

17a-4(b)(4), require that broker-dealers preserve for at least three years, the first two years in an 

easily accessible place, originals of all communications received and copies of all written 

communications sent relating to the broker-dealer’s business as such.  These rules impose 

minimum recordkeeping requirements that are based on standards a prudent broker-dealer should 

follow in the normal course of business.  

13. The Commission previously has stated that these and other recordkeeping 

requirements “are an integral part of the investor protection function of the Commission, and 

other securities regulators, in that the preserved records are the primary means of monitoring 

compliance with applicable securities laws, including antifraud provisions and financial 

responsibility standards.”  Commission Guidance to Broker-Dealers on the Use of Electronic 

Storage Media under the Electronic Signatures in Global and National Commerce Act of 2000 

with Respect to Rule 17a-4(f), 17 C.F.R. Part 241, Exchange Act Rel. No. 44238 (May 1, 2001). 

Canaccord’s Policies and Procedures 

14. Canaccord maintained certain policies and procedures designed to ensure the 

retention of business-related records, including electronic communications, in compliance with 

the relevant recordkeeping provisions.   

15. Canaccord personnel were advised that the use of unapproved electronic 

communications methods, including on their personal devices, was not permitted, and they 

should not use personal email, chats or text messaging applications for business purposes, or 

forward work-related communications to unapproved applications on their personal devices.  

16. Messages sent through firm-approved communications methods were monitored, 

subject to review, and archived.  Messages sent through unapproved communications methods, 



4 

 

such as WhatsApp and other unapproved applications on personal devices, were not monitored, 

subject to review or archived. 

17. Canaccord policies and procedures were designed to address supervisors’ 

supervision of personnel’s training in Canaccord’s communications policies and adherence to 

Canaccord’s books and recordkeeping requirements.  Supervisory policies notified personnel that 

electronic communications were subject to surveillance by Canaccord.  Canaccord had 

procedures for all personnel, including supervisors, requiring annual, and later quarterly, self-

attestations of compliance.  

18. Canaccord, however, failed to implement a system reasonably expected to 

determine whether all personnel, including supervisors, were following Canaccord’s policies and 

procedures.  While permitting personnel to use approved communications methods, including on 

personal phones, for business communications, Canaccord failed to implement sufficient 

monitoring to ensure that its recordkeeping and communications policies were being followed.  

Canaccord’s Recordkeeping Failures Across Its Brokerage Business 

19. In September 2021, the Commission staff commenced a risk-based initiative to 

investigate whether broker-dealers were properly retaining business-related messages sent and 

received on personal devices.  In December 2023, Canaccord voluntarily contacted staff 

regarding certain off-channel communications that it had identified related to its business.  

Canaccord cooperated with the staff’s investigation by proactively gathering communications 

from the personal devices of its personnel.  As reported to the Commission staff, Canaccord 

personnel who had engaged in the use of off-channel communications included senior managers 

across the firm.  

20. Canaccord’s investigation uncovered pervasive off-channel communications at all 

seniority levels of Canaccord.  The investigation determined that all broker-dealer personnel 

sampled had engaged in at least some level of off-channel communications.  Overall, personnel 

sent and received numerous off-channel communications, involving other Canaccord personnel, 

and Canaccord’s customers, investors, and/or other participants in the securities industry.  Within 

Canaccord, significant numbers of senior personnel participated in off-channel communications. 

21. During the Relevant Period, Canaccord personnel sent and received off-channel 

messages that concerned its broker-dealer’s business. 

22. For example, a managing director exchanged numerous off-channel business-

related messages with at least 13 Canaccord colleagues, including exchanging text messages 

with managing directors and junior personnel under their supervision, and 165 customers, 

investors, or other market participants.  These messages related to the broker-dealer’s business as 

such.  

23. In addition, a managing director exchanged numerous off-channel business-

related messages with at least 26 Canaccord colleagues, including exchanging text messages 

with executives, heads of desks, and junior personnel under their supervision, and 69 customers, 



5 

 

investors, or other market participants.  These messages related to the broker-dealer’s business as 

such.  

24. Furthermore, a managing director exchanged numerous off-channel business-

related messages with at least 24 Canaccord colleagues, including exchanging text and 

WhatsApp messages with managing directors and a senior managing director, one individual at 

another financial services firm, and 32 customers, investors, or other market participants.  These 

messages related to the broker-dealer business as such.  

Canaccord’s Failure to Preserve Required Records Potentially 

Compromised and Delayed Commission Matters 

25. During the Relevant Period, Canaccord received and responded to Commission 

subpoenas for documents and records requests in various Commission investigations.  By failing 

to maintain and preserve required records relating to its broker-dealer business, Canaccord likely 

deprived the Commission of these off-channel communications in various investigations. 

 

Canaccord’s Violations and Failure to Supervise 

26. As a result of the conduct described above, Respondent willfully2 violated Section 

17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder. 

 

27. As a result of the conduct described above, Respondent failed reasonably to 

supervise its personnel with a view to preventing or detecting certain of its supervised persons’ 

aiding and abetting violations of Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) 

thereunder, within the meaning of Section 15(b)(4)(E) of the Exchange Act.  

Canaccord’s Self-Reporting, Cooperation, and Remediation 

28. In determining to accept the Offer, the Commission considered Canaccord’s self-

report, cooperation afforded to the Commission staff, and remediation.  Canaccord conducted an 

internal investigation and self-reported the facts to the Commission staff.  Prior to and after 

approaching the Commission staff, Canaccord enhanced policies and procedures, increased 

training concerning the use of approved communications methods, including on personal 

devices, gave employees the option to utilize their personal devices with compliant text message 

capture, enhanced communication surveillance to seek to better identify possible off-channel 

communications, and began and continued to implement significant changes to the technology 

available to personnel, which included providing personnel with the option of using firm-issued 

devices, thereby making approved channels more readily available.  

 
2  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act, 

“‘means no more than that the person charged with the duty knows what he is doing.’”  

Wonsover v. SEC, 205 F.3d 408, 414 (D.C. Cir 2000) (quoting Hughes v. SEC, 174 F.2d 969, 

977 (D.C. Cir. 1949)).  



6 

 

Undertakings 

Respondent has undertaken to: 

 

29. Independent Compliance Consultant. 

a.  Canaccord shall retain, within thirty (30) days of the entry of this Order, the 

services of an independent compliance consultant (“Compliance Consultant”) that is not 

unacceptable to the Commission staff.  The Compliance Consultant’s compensation and 

expenses shall be borne exclusively by Canaccord. 

 

b.  Canaccord will oversee the work of the Compliance Consultant. 

 

c.  Canaccord shall provide to the Commission staff, within sixty (60) days of the 

entry of this Order, a copy of the engagement letter detailing the Compliance 

Consultant’s responsibilities, which shall include a comprehensive compliance review as 

described below.  Canaccord shall require that, within ninety (90) days of the date of the 

engagement letter, the Compliance Consultant conduct: 

 

i.  A comprehensive review of Canaccord’s supervisory, compliance, and 

other policies and procedures designed to ensure that Canaccord’s electronic 

communications, including those found on personal electronic devices, including 

without limitation, cellular phones (“Personal Devices”), are preserved in 

accordance with the requirements of the federal securities laws. 

 

ii.  A comprehensive review of training conducted by Canaccord to ensure 

personnel are complying with the requirements regarding the preservation of 

electronic communications, including those found on Personal Devices, in 

accordance with the requirements of the federal securities laws, including by 

ensuring that Canaccord personnel certify in writing on a quarterly basis that they 

are complying with preservation requirements.  

 

iii.  An assessment of the surveillance program measures implemented by 

Canaccord to ensure compliance, on an ongoing basis, with the requirements 

found in the federal securities laws to preserve electronic communications, 

including those found on Personal Devices. 

 

iv.  An assessment of the technological solutions that Canaccord has 

begun implementing to meet the record retention requirements of the federal 

securities laws, including an assessment of the likelihood that Canaccord 

personnel will use the technological solutions going forward and a review of the 

measures employed by Canaccord to track employee usage of new technological 

solutions.  

 

v.  An assessment of the measures used by Canaccord to prevent the use of 

unauthorized communications methods for business communications by 



7 

 

personnel.  This assessment should include, but not be limited to, a review of 

Canaccord’s policies and procedures to ascertain if they provide for any 

significant technology and/or behavioral restrictions that help prevent the risk of 

the use of unapproved communications methods on Personal Devices (e.g., 

trading floor restrictions).   

 

vi.  A review of Canaccord’s electronic communications surveillance 

routines to ensure that electronic communications through approved 

communications methods found on Personal Devices are incorporated into 

Canaccord’s overall communications surveillance program.   

 

vii.  A comprehensive review of the framework adopted by Canaccord to 

address instances of non-compliance by Canaccord personnel with Canaccord’s 

policies and procedures concerning the use of Personal Devices to communicate 

about Canaccord business in the past.  This review shall include a survey of how 

Canaccord determined which personnel failed to comply with Canaccord’s 

policies and procedures, the corrective action carried out, an evaluation of who 

violated the policies and procedures and why, what penalties were imposed, and 

whether penalties were handed out consistently across business lines and seniority 

levels.   

 

d.  Canaccord shall require that, within forty-five (45) days after completion of 

the review set forth in sub-paragraphs 29.c.i. through c.vii. above, the Compliance 

Consultant shall submit a detailed written report of its findings to Canaccord and to the 

Commission staff (the “Report”).  Canaccord shall require that the Report include a 

description of the review performed, the names of the individuals who performed the 

review, the conclusions reached, the Compliance Consultant’s recommendations for 

changes in or improvements to Canaccord’s policies and procedures, and a summary of 

the plan for implementing the recommended changes in or improvements to Canaccord’s 

policies and procedures. 

 

e.  Canaccord shall adopt all recommendations contained in the Report within 

ninety (90) days of the date of the Report; provided, however, that within forty-five (45) 

days after the date of the Report, Canaccord shall advise the Compliance Consultant and 

the Commission staff in writing of any recommendations that Canaccord considers to be 

unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 

that Canaccord considers unduly burdensome, impractical, or inappropriate, Canaccord 

need not adopt such recommendation at that time, but shall propose in writing an 

alternative policy, procedure, or disclosure designed to achieve the same objective or 

purpose. 

 

f.  As to any recommendation concerning Canaccord’s policies or procedures on 

which Canaccord and the Compliance Consultant do not agree, Canaccord and the 

Compliance Consultant shall attempt in good faith to reach an agreement within sixty 

(60) days after the date of the Report.  Within fifteen (15) days after the conclusion of the 

discussion and evaluation by Canaccord and the Compliance Consultant, Canaccord shall 



8 

 

require that the Compliance Consultant inform Canaccord and the Commission staff in 

writing of the Compliance Consultant’s final determination concerning any 

recommendation that Canaccord considers to be unduly burdensome, impractical, or 

inappropriate.  Canaccord shall abide by the determinations of the Compliance 

Consultant and, within sixty (60) days after final agreement between Canaccord and the 

Compliance Consultant or final determination by the Compliance Consultant, whichever 

occurs first, Canaccord shall adopt and implement all of the recommendations that the 

Compliance Consultant deems appropriate. 

 

g.  Canaccord shall cooperate fully with the Compliance Consultant and shall 

provide the Compliance Consultant with access to such of Canaccord’s files, books, 

records, and personnel as are reasonably requested by the Compliance Consultant for 

review. 

 

h.  Canaccord shall not have the authority to terminate the Compliance Consultant 

or substitute another compliance consultant for the initial Compliance Consultant, 

without the prior written approval of the Commission staff.  Canaccord shall compensate 

the Compliance Consultant and persons engaged to assist the Compliance Consultant for 

services rendered under this Order at their reasonable and customary rates. 

 

i.  For the period of engagement and for a period of two (2) years from 

completion of the engagement, Respondent shall not (i) retain the Compliance Consultant 

for any other professional services outside of the services described in this Order; (ii) 

enter into any other professional relationship with the Compliance Consultant, including 

any employment, consultant, attorney-client, auditing or other professional relationship; 

or (iii) enter, without prior written consent of the Commission staff, into any such 

professional relationship with any of the Compliance Consultant’s present or former 

affiliates, employers, directors, officers, employees, or agents.  

 

j.  The Report by the Compliance Consultant will likely include confidential 

financial, proprietary, competitive business or commercial information.  Public disclosure 

of the Report could discourage cooperation, impede pending or potential government 

investigations or undermine the objectives of the reporting requirement.  For these 

reasons, among others, the Report and the contents thereof are intended to remain and 

shall remain non-public, except (1) pursuant to court order, (2) as agreed to by the parties 

in writing, (3) to the extent that the Commission determines in its sole discretion that 

disclosure would be in furtherance of the Commission’s discharge of its duties and 

responsibilities, or (4) as otherwise required by law. 

 

30. One-Year Evaluation.  Canaccord shall require the Compliance Consultant to 

assess Canaccord’s program for the preservation, as required under the federal securities laws, of 

electronic communications, including those found on Personal Devices, commencing one year 

after submitting the Report required by Paragraph 29.d above.  Canaccord shall require this 

review to evaluate Canaccord’s progress in the areas described in Paragraphs 29.c.i-vii above.  

After this review, Canaccord shall require the Compliance Consultant to submit a report (the 

“One Year Report”) to Canaccord and the Commission staff and shall ensure that the One Year 



9 

 

Report includes an updated assessment of Canaccord’s policies and procedures with regard to the 

preservation of electronic communications (including those found on Personal Devices), training, 

surveillance programs, and technological solutions implemented in the prior year period.  

31. Reporting Discipline Imposed.  For two (2) years following the entry of this Order, 

Canaccord shall notify the Commission staff as follows upon the imposition of any discipline 

imposed by Canaccord, including, but not limited to: written warnings; loss of any pay, bonus, or 

incentive compensation; or the termination of personnel; with respect to any employee found to 

have violated Canaccord’s policies and procedures concerning the preservation of electronic 

communications, including those found on Personal Devices: at least forty-eight (48) hours before 

the filing of a Form U5, or within ten (10) days of the imposition of other discipline.   

32. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 

the One Year Report, Canaccord will also have its Internal Audit function conduct a separate 

audit(s) to assess Canaccord’s progress in the areas described in Paragraphs 29.c.i-vii above.  After 

completion of this audit(s), Canaccord shall ensure that Internal Audit submits a report to 

Canaccord and to the Commission staff. 

33. Recordkeeping.  Canaccord shall preserve, for a period of not less than six (6) 

years from the end of the fiscal year last used, the first two (2) years in an easily accessible place, 

any record of compliance with these undertakings. 

34. Deadlines.  For good cause shown, the Commission staff may extend any of the 

procedural dates relating to the undertakings.  Deadlines for procedural dates shall be counted in 

calendar days, except that if the last day falls on a weekend or federal holiday, the next business 

day shall be considered to be the last day. 

35. Certification.  Canaccord shall certify, in writing, compliance with the 

undertakings set forth above.  The certification shall identify the undertakings, provide written 

evidence of compliance in the form of a narrative, and be supported by exhibits sufficient to 

demonstrate compliance.  The Commission staff may make reasonable requests for further 

evidence of compliance, and Respondent agrees to provide such evidence.  The certification and 

supporting material shall be submitted to Alison R. Levine, Assistant Regional Director, 

Division of Enforcement, New York Regional Office, Securities and Exchange Commission, 100 

Pearl Street, Suite 20-100, New York, NY, 10004-2616, or such other person as the Commission 

staff may request, with a copy to the Office of Chief Counsel of the Enforcement Division, no 

later than sixty (60) days from the date of the completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 

to impose the sanctions agreed to in Respondent’s Offer. 

 

 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act, it is hereby 

ORDERED that: 

 



10 

 

 A. Respondent cease and desist from committing or causing any violations and any 

future violations of Section 17(a) of the Exchange Act and Rule 17a-4 thereunder. 

 

B. Respondent is censured.  

 

C. Respondent shall comply with the undertakings enumerated in paragraphs 29 to 

35 above. 

  

 D. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $1,250,000 to the Securities and Exchange Commission for transfer to 

the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   

 

 Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Canaccord as a Respondent in these proceedings, and the file number of these proceedings; a 

copy of the cover letter and check or money order must be sent to Thomas P. Smith, Jr., 

Associate Regional Director, Securities and Exchange Commission, 100 Pearl Street, Suite 20-

100, New York, New York 10004-2616.   

 

 E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission’s counsel in this action and pay the amount 



11 

 

of the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary