In re Great Point Capital

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 100696 / August 14, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21992 
 
 
In the Matter of 
 
Great Point Capital, 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 Great Point Capital, LLC (hereinafter, “Respondent” or “Great 
Point”). 
 
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: 
 
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 
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 
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 the widespread and longstanding failure of Great 
Point personnel throughout the firm, including at senior levels, to adhere to certain of these 
essential requirements and Great Point’s own policies. Using their personal devices, these Great 
Point personnel communicated both internally and externally by text messages, which were not 
an approved written communications platform (“off-channel communications”). 
3. From at least August 2019, Great Point personnel sent and received off-channel 
communications that were records required to be maintained under Exchange Act Rule 17a-
4(b)(4).  Respondent did not maintain or preserve the substantial majority of these written 
communications.  Respondent’s failures were firm-wide and involved personnel at various levels 
of authority throughout the organization.  As a result, Respondent violated Section 17(a) of the 
Exchange Act and Rule 17a-4(b)(4) thereunder. 
4. Great Point’s supervisors, who were responsible for supervising junior personnel, 
routinely communicated off-channel using their personal devices.  In fact, managers and officers 
responsible for supervising junior personnel themselves failed to comply with Great Point’s 
policies by communicating using non-Great Point approved methods on their personal devices 
about Great Point’s broker-dealer business.  
5. Great Point’s widespread failure to implement a system of follow-up and review 
reasonably expected to determine whether personnel were following its policies and procedures 
that prohibit off-channel communications led to its failure to reasonably supervise its personnel 
within the meaning of Section 15(b)(4)(E) of the Exchange Act.  
6. During the time period that Great Point failed to maintain and preserve off-
channel communications that its personnel sent and received related to its broker-dealer business, 
Great Point received and responded to Commission subpoenas for documents and/or records 
requests in a number of Commission investigations.  As a result, Great Point’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.   
7. Commission staff found Great Point’s misconduct after commencing a risk-based 
initiative to investigate the use of off-channel and unpreserved communications at broker-
dealers. Great Point has initiated a review of its recordkeeping failures and begun a program of 
remediation. As set forth in the Undertakings below, Great Point will retain an independent 
compliance consultant to review and assess Great Point’s remedial steps relating to its 
recordkeeping practices, policies and procedures, related supervisory practices, and employment 
actions. 

 
 
3 
Respondent 
8. Great Point Capital, LLC is a Delaware limited liability company with its 
principal office in Chicago, Illinois, and is registered with the Commission as a broker-dealer.  
Recordkeeping Requirements under the Exchange Act 
9. 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, with 
respect to the Exchange Act, otherwise in furtherance of the purposes of the Exchange Act. 
10. The Commission adopted Rule 17a-4 under the Exchange Act pursuant to this 
authority.  These rules specify the manner and length of time that the records created in 
accordance with Commission rules, and certain other records produced by broker-dealers, must 
be maintained and produced promptly to Commission representatives.   
11. The rules adopted under Section 17(a)(1) of the Exchange Act, including Rule 
17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 
communications received and copies of all 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.  
12. 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). 
Great Point’s Policies and Procedures 
13. Great Point maintained certain policies and procedures designed to ensure the 
retention of business-related records, including electronic communications, in compliance with 
the relevant recordkeeping provisions.   
14. Great Point 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.  
15. Messages sent through Great Point’s approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Messages sent through 
unapproved communications methods, such as text messaging, and those sent from unapproved 
applications on personal devices, were not monitored, subject to review or archived. 
16. Firm policies were designed to address supervisors’ supervision of personnel 
training in the firm’s communications policies and adherence to Great Point’s books and 

 
 
4 
recordkeeping requirements.  Great Point had procedures for all personnel, including supervisors, 
requiring annual self-attestations of compliance.  
17. Great Point, however, failed to implement a system of follow-up and review 
reasonably expected to determine that all personnel, including supervisors, were following Great 
Point’s policies.  While permitting personnel to use approved communications methods, 
including on personal phones, for business communications, Great Point failed to implement 
sufficient monitoring to ensure that its recordkeeping and communications policies were being 
followed.  
Great Point’s Recordkeeping Failures Across Its Brokerage Businesses 
18. 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.  Great Point cooperated with the investigation by voluntarily 
interviewing a sampling of senior personnel and gathering and reviewing messages found on the 
individuals’ personal devices. These personnel included senior leadership, such as principal 
officers and branch managers. 
19. The Commission staff’s investigation found pervasive off-channel communications 
at various seniority levels of Great Point. The investigation found that all personnel sampled had 
engaged in at least some level of off-channel communications. Overall, these personnel sent and 
received numerous off-channel communications, involving other Great Point personnel and 
external contacts in the securities industry. Within Great Point, a significant number of principal 
officers and branch managers participated in off-channel communications. 
20. From at least August 2019, Great Point personnel sent and received off-channel 
communications that concerned the broker-dealer’s business.  For example, in September 2019, a 
Great Point manager exchanged off-channel messages with a registered representative regarding 
securities-related orders and trading.  These messages related to Great Point’s broker-dealer 
business as such. 
Great Point’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
21. Between August 2019 and the present, Great Point received and responded to 
Commission subpoenas for documents and/or records requests in numerous Commission 
investigations.  By failing to maintain and preserve required records relating to its business, 
Great Point likely deprived the Commission of these off-channel communications in various 
investigations. 

 
 
5 
Great Point’s Violations and Failure to Supervise 
22. As a result of the conduct described above, from at least August 2019 through the 
date of this Order, Great Point willfully
2
 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder.   
23. As a result of the conduct described above, Great Point 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.  
Great Point’s Remedial Efforts 
24. In determining to accept the Offer, the Commission considered steps undertaken by 
Great Point prior to and after being approached by Commission staff, including revising its 
policies and procedures relating to the retention of off-channel communications, as well as 
cooperation afforded to the Commission staff.  
Undertakings 
25. Prior to this action, Great Point enhanced its policies and procedures concerning 
the use of approved communications methods, including on personal devices, and began 
implementing changes to the technology available to its personnel.  In addition, Great Point has 
undertaken to: 
26. Independent Compliance Consultant. 
a.  Great Point 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 Great Point. 
 
b.  Great Point will oversee the work of the Compliance Consultant. 
 
c.  Great Point 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.  Great Point shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 
 
 
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.’”  See 
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)).  There is no requirement that the actor “also be aware that he is violating 
one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).   

 
 
6 
i.  A comprehensive review of Great Point’s supervisory, compliance, and 
other policies and procedures designed to ensure that Great Point’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 Great Point 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 Great Point 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 
Great Point 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 Great Point has 
begun implementing to meet the record retention requirements of the federal 
securities laws, including an assessment of the likelihood that Great Point 
personnel will use the technological solutions going forward and a review of the 
measures employed by Great Point to track personnel usage of new technological 
solutions.  
 
v.  An assessment of the measures used by Great Point to prevent the use 
of unauthorized communications methods for business communications by its 
personnel.  This assessment should include, but not be limited to, a review of 
Great Point’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 Great Point’s electronic communications surveillance 
routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into Great 
Point’s overall communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Great Point to 
address instances of non-compliance by Great Point personnel with Great Point’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Great Point business in the past.  This review shall include a survey of how 
Great Point determined which personnel failed to comply with Great Point 
policies and procedures, the corrective action carried out, an evaluation of who 
violated policies and why, what penalties were imposed, and whether penalties 
were handed out consistently across business lines and seniority levels.   

 
 
7 
 
d.  Great Point shall require that, within forty-five (45) days after completion of 
the review set forth in sub-paragraphs 26.c.i. through 26.c.vii. above, the Compliance 
Consultant shall submit a detailed written report of its findings to Great Point and to the 
Commission staff (the “Report”).  Great Point 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 Great Point’s policies and procedures, and a summary of 
the plan for implementing the recommended changes in or improvements to Great Point’s 
policies and procedures. 
 
e.  Great Point 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, Great Point shall advise the Compliance Consultant and 
the Commission staff in writing of any recommendations that Great Point considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Great Point considers unduly burdensome, impractical, or inappropriate, Great Point 
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 Great Point’s policies or procedures on 
which Great Point and the Compliance Consultant do not agree, Great Point 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 Great Point and the Compliance Consultant, Great Point 
shall require that the Compliance Consultant inform Great Point and the Commission 
staff in writing of the Compliance Consultant’s final determination concerning any 
recommendation that Great Point considers to be unduly burdensome, impractical, or 
inappropriate.  Great Point shall abide by the determinations of the Compliance 
Consultant and, within sixty (60) days after final agreement between Great Point and the 
Compliance Consultant or final determination by the Compliance Consultant, whichever 
occurs first, Great Point shall adopt and implement all of the recommendations that the 
Compliance Consultant deems appropriate. 
 
g.  Great Point shall cooperate fully with the Compliance Consultant and shall 
provide the Compliance Consultant with access to Great Point’s files, books, records, and 
personnel as are reasonably requested by the Compliance Consultant for review. 
 
h. Great Point 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.  Great Point 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. 
 

 
 
8 
i.  For the period of engagement and for a period of two years from completion of 
the engagement, Great Point 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 acting in their capacity as 
such. 
 
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. 
 
27. One-Year Evaluation. Great Point shall require the Compliance Consultant to 
assess Great Point’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 26.d above.  Great Point shall require this 
review to evaluate Great Point’s progress in the areas described in Paragraph 26.c.i through 
26.c.vii above.  After this review, Great Point shall require the Compliance Consultant to submit 
a report (the “One Year Report”) to Great Point and the Commission staff and shall ensure that 
the One Year Report includes an updated assessment of Great Point’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.  
28. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Great Point shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Great Point, including, but not limited to, written warnings, loss of any pay, bonus, or 
incentive compensation, or the termination of employment, with respect to any personnel found to 
have violated Great Point’s policies and procedures concerning the preservation of electronic 
communications, including those found on Personal Devices: at least 48 hours before the filing of a 
Form U-5, or within ten (10) days of the imposition of other discipline.   
29. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Great Point will also have its Internal Audit function conduct a separate 
audit(s) to assess Great Point’s progress in the areas described in Paragraph 26.c.i through 26.c.vii 
above.  After completion of this audit(s), Great Point shall ensure that Internal Audit submits a 
report to each Great Point and to the Commission staff. 

 
 
9 
30. Recordkeeping.  Great Point 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.   
 
31. 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. 
32. Certification.  Great Point 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 Amy S. Cotter, Assistant Regional Director, Division of 
Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 1450, Chicago, Illinois 
60604, 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: 
 
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 26 to 
32 above. 
 
D. Respondent shall pay a civil penalty in the amount of $2,000,000 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).   
 
Payment shall be made in the following installments: 
 
1. Due within 30 days of the entry of this Order: $250,000.00; 
2. Due within 120 days of the entry of this Order: $583,333.33; 
3. Due within 240 days of the entry of this Order: $583,333.33; and 

 
 
10 
4. The remainder within 360 days of the entry of this Order. 
Payment shall be applied first to post-order interest, which accrues pursuant to 31 U.S.C. 
§ 3717.  Prior to making the final payment set forth herein, Respondent shall contact the 
staff of the Commission for the amount due. If Respondent fails to make any payment by 
the date agreed and/or in the amount agreed according to the schedule set forth above, all 
outstanding payments under this Order, including post-order interest, minus any 
payments made, shall become due and payable immediately at the discretion of the staff 
of the Commission without further application to the Commission. 
 
 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 
Great Point as 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 Amy S. Cotter, Assistant Regional 
Director, Division of Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 
1450, Chicago, Illinois 60604.   
 
 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, the 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 
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.   

 
 
11 
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. 100696 / August 14, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21992 

 

 

In the Matter of 

 

Great Point Capital, 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 Great Point Capital, LLC (hereinafter, “Respondent” or “Great 

Point”). 

 

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: 

 
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 

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 

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 the widespread and longstanding failure of Great 

Point personnel throughout the firm, including at senior levels, to adhere to certain of these 

essential requirements and Great Point’s own policies. Using their personal devices, these Great 

Point personnel communicated both internally and externally by text messages, which were not 

an approved written communications platform (“off-channel communications”). 

3. From at least August 2019, Great Point personnel sent and received off-channel 

communications that were records required to be maintained under Exchange Act Rule 17a-

4(b)(4).  Respondent did not maintain or preserve the substantial majority of these written 

communications.  Respondent’s failures were firm-wide and involved personnel at various levels 

of authority throughout the organization.  As a result, Respondent violated Section 17(a) of the 

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

4. Great Point’s supervisors, who were responsible for supervising junior personnel, 

routinely communicated off-channel using their personal devices.  In fact, managers and officers 

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

policies by communicating using non-Great Point approved methods on their personal devices 

about Great Point’s broker-dealer business.  

5. Great Point’s widespread failure to implement a system of follow-up and review 

reasonably expected to determine whether personnel were following its policies and procedures 

that prohibit off-channel communications led to its failure to reasonably supervise its personnel 

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

6. During the time period that Great Point failed to maintain and preserve off-

channel communications that its personnel sent and received related to its broker-dealer business, 

Great Point received and responded to Commission subpoenas for documents and/or records 

requests in a number of Commission investigations.  As a result, Great Point’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.   

7. Commission staff found Great Point’s misconduct after commencing a risk-based 

initiative to investigate the use of off-channel and unpreserved communications at broker-

dealers. Great Point has initiated a review of its recordkeeping failures and begun a program of 

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

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

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

actions. 



 

 

3 

Respondent 

8. Great Point Capital, LLC is a Delaware limited liability company with its 

principal office in Chicago, Illinois, and is registered with the Commission as a broker-dealer.  

Recordkeeping Requirements under the Exchange Act 

9. 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, with 

respect to the Exchange Act, otherwise in furtherance of the purposes of the Exchange Act. 

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

authority.  These rules specify the manner and length of time that the records created in 

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

be maintained and produced promptly to Commission representatives.   

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

17a-4(b)(4), require that broker-dealers preserve in an easily accessible place originals of all 

communications received and copies of all 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.  

12. 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). 

Great Point’s Policies and Procedures 

13. Great Point maintained certain policies and procedures designed to ensure the 

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

the relevant recordkeeping provisions.   

14. Great Point 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.  

15. Messages sent through Great Point’s approved communications methods were 

monitored, subject to review, and, when appropriate, archived.  Messages sent through 

unapproved communications methods, such as text messaging, and those sent from unapproved 

applications on personal devices, were not monitored, subject to review or archived. 

16. Firm policies were designed to address supervisors’ supervision of personnel 

training in the firm’s communications policies and adherence to Great Point’s books and 



 

 

4 

recordkeeping requirements.  Great Point had procedures for all personnel, including supervisors, 

requiring annual self-attestations of compliance.  

17. Great Point, however, failed to implement a system of follow-up and review 

reasonably expected to determine that all personnel, including supervisors, were following Great 

Point’s policies.  While permitting personnel to use approved communications methods, 

including on personal phones, for business communications, Great Point failed to implement 

sufficient monitoring to ensure that its recordkeeping and communications policies were being 

followed.  

Great Point’s Recordkeeping Failures Across Its Brokerage Businesses 

18. 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.  Great Point cooperated with the investigation by voluntarily 

interviewing a sampling of senior personnel and gathering and reviewing messages found on the 

individuals’ personal devices. These personnel included senior leadership, such as principal 

officers and branch managers. 

19. The Commission staff’s investigation found pervasive off-channel communications 

at various seniority levels of Great Point. The investigation found that all personnel sampled had 

engaged in at least some level of off-channel communications. Overall, these personnel sent and 

received numerous off-channel communications, involving other Great Point personnel and 

external contacts in the securities industry. Within Great Point, a significant number of principal 

officers and branch managers participated in off-channel communications. 

20. From at least August 2019, Great Point personnel sent and received off-channel 

communications that concerned the broker-dealer’s business.  For example, in September 2019, a 

Great Point manager exchanged off-channel messages with a registered representative regarding 

securities-related orders and trading.  These messages related to Great Point’s broker-dealer 

business as such. 

Great Point’s Failure to Preserve Required Records Potentially 

Compromised and Delayed Commission Matters 

21. Between August 2019 and the present, Great Point received and responded to 

Commission subpoenas for documents and/or records requests in numerous Commission 

investigations.  By failing to maintain and preserve required records relating to its business, 

Great Point likely deprived the Commission of these off-channel communications in various 

investigations. 



 

 

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Great Point’s Violations and Failure to Supervise 

22. As a result of the conduct described above, from at least August 2019 through the 

date of this Order, Great Point willfully2 violated Section 17(a) of the Exchange Act and Rule 

17a-4(b)(4) thereunder.   

23. As a result of the conduct described above, Great Point 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.  

Great Point’s Remedial Efforts 

24. In determining to accept the Offer, the Commission considered steps undertaken by 

Great Point prior to and after being approached by Commission staff, including revising its 

policies and procedures relating to the retention of off-channel communications, as well as 

cooperation afforded to the Commission staff.  

Undertakings 

25. Prior to this action, Great Point enhanced its policies and procedures concerning 

the use of approved communications methods, including on personal devices, and began 

implementing changes to the technology available to its personnel.  In addition, Great Point has 

undertaken to: 

26. Independent Compliance Consultant. 

a.  Great Point 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 Great Point. 

 

b.  Great Point will oversee the work of the Compliance Consultant. 

 

c.  Great Point 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.  Great Point shall require that, within ninety (90) days of the date of the 

engagement letter, the Compliance Consultant conduct: 

 

 
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.’”  See 

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)).  There is no requirement that the actor “also be aware that he is violating 

one of the Rules or Acts.”  Tager v. SEC, 344 F.2d 5, 8 (2d Cir. 1965).   



 

 

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

other policies and procedures designed to ensure that Great Point’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 Great Point 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 Great Point 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 

Great Point 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 Great Point has 

begun implementing to meet the record retention requirements of the federal 

securities laws, including an assessment of the likelihood that Great Point 

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

measures employed by Great Point to track personnel usage of new technological 

solutions.  

 

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

of unauthorized communications methods for business communications by its 

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

Great Point’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 Great Point’s electronic communications surveillance 

routines to ensure that electronic communications through approved 

communications methods found on Personal Devices are incorporated into Great 

Point’s overall communications surveillance program.   

 

vii.  A comprehensive review of the framework adopted by Great Point to 

address instances of non-compliance by Great Point personnel with Great Point’s 

policies and procedures concerning the use of Personal Devices to communicate 

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

Great Point determined which personnel failed to comply with Great Point 

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

violated policies and why, what penalties were imposed, and whether penalties 

were handed out consistently across business lines and seniority levels.   



 

 

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

the review set forth in sub-paragraphs 26.c.i. through 26.c.vii. above, the Compliance 

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

Commission staff (the “Report”).  Great Point 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 Great Point’s policies and procedures, and a summary of 

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

policies and procedures. 

 

e.  Great Point 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, Great Point shall advise the Compliance Consultant and 

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

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

that Great Point considers unduly burdensome, impractical, or inappropriate, Great Point 

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 Great Point’s policies or procedures on 

which Great Point and the Compliance Consultant do not agree, Great Point 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 Great Point and the Compliance Consultant, Great Point 

shall require that the Compliance Consultant inform Great Point and the Commission 

staff in writing of the Compliance Consultant’s final determination concerning any 

recommendation that Great Point considers to be unduly burdensome, impractical, or 

inappropriate.  Great Point shall abide by the determinations of the Compliance 

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

Compliance Consultant or final determination by the Compliance Consultant, whichever 

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

Compliance Consultant deems appropriate. 

 

g.  Great Point shall cooperate fully with the Compliance Consultant and shall 

provide the Compliance Consultant with access to Great Point’s files, books, records, and 

personnel as are reasonably requested by the Compliance Consultant for review. 

 

h. Great Point 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.  Great Point 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. 

 



 

 

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i.  For the period of engagement and for a period of two years from completion of 

the engagement, Great Point 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 acting in their capacity as 

such. 

 

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. 

 

27. One-Year Evaluation. Great Point shall require the Compliance Consultant to 

assess Great Point’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 26.d above.  Great Point shall require this 

review to evaluate Great Point’s progress in the areas described in Paragraph 26.c.i through 

26.c.vii above.  After this review, Great Point shall require the Compliance Consultant to submit 

a report (the “One Year Report”) to Great Point and the Commission staff and shall ensure that 

the One Year Report includes an updated assessment of Great Point’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.  

28. Reporting Discipline Imposed.  For two years following the entry of this Order, 

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

imposed by Great Point, including, but not limited to, written warnings, loss of any pay, bonus, or 

incentive compensation, or the termination of employment, with respect to any personnel found to 

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

communications, including those found on Personal Devices: at least 48 hours before the filing of a 

Form U-5, or within ten (10) days of the imposition of other discipline.   

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

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

audit(s) to assess Great Point’s progress in the areas described in Paragraph 26.c.i through 26.c.vii 

above.  After completion of this audit(s), Great Point shall ensure that Internal Audit submits a 

report to each Great Point and to the Commission staff. 



 

 

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30. Recordkeeping.  Great Point 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.   
 

31. 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. 

32. Certification.  Great Point 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 Amy S. Cotter, Assistant Regional Director, Division of 

Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 1450, Chicago, Illinois 

60604, 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: 

 

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 26 to 

32 above. 

 

D. Respondent shall pay a civil penalty in the amount of $2,000,000 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).   

 

Payment shall be made in the following installments: 

 

1. Due within 30 days of the entry of this Order: $250,000.00; 

2. Due within 120 days of the entry of this Order: $583,333.33; 

3. Due within 240 days of the entry of this Order: $583,333.33; and 



 

 

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4. The remainder within 360 days of the entry of this Order. 

Payment shall be applied first to post-order interest, which accrues pursuant to 31 U.S.C. 

§ 3717.  Prior to making the final payment set forth herein, Respondent shall contact the 

staff of the Commission for the amount due. If Respondent fails to make any payment by 

the date agreed and/or in the amount agreed according to the schedule set forth above, all 

outstanding payments under this Order, including post-order interest, minus any 

payments made, shall become due and payable immediately at the discretion of the staff 

of the Commission without further application to the Commission. 

 

 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 

Great Point as 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 Amy S. Cotter, Assistant Regional 

Director, Division of Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 

1450, Chicago, Illinois 60604.   

 

 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, the 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 

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.   



 

 

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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