In re Osaic Services

 
 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 100701/ August 14, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6651 / August 14, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21997 
 
 
In the Matter of 
 
Osaic Services, Inc. and 
Osaic Wealth, Inc., 
 
Respondents. 
 
ORDER INSTITUTING ADMINISTRATIVE 
AND CEASE-AND-DESIST PROCEEDINGS, 
PURSUANT TO SECTIONS 15(b) AND 21C 
OF THE SECURITIES EXCHANGE ACT OF 
1934 AND SECTIONS 203(e) AND 203(k) OF 
THE INVESTMENT ADVISERS ACT OF 
1940, 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”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against Osaic Services, Inc. (“Osaic Services”) and Osaic Wealth, Inc. (“Osaic 
Wealth”) (collectively, “Respondents”). 
 
II. 
 In anticipation of the institution of these proceedings, Respondents have submitted Offers 
of Settlement (“Offers”) that the Commission has determined to accept.  Respondents admit the 
facts set forth in Section III below, acknowledge that their conduct violated the federal securities 
laws, admit the Commission’s jurisdiction over them and the subject matter of these proceedings, 
and consent 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 and 
Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and 
Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below.   
 

 
 
2 
III. 
 On the basis of this Order and Respondents’ Offers, the Commission finds
1
 that: 
 
Summary 
1. The federal securities laws impose recordkeeping requirements on broker-dealers 
and registered investment advisers 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 Osaic 
Services and Osaic Wealth employees throughout the firms, including at senior levels, to adhere 
to certain of these essential requirements and the firms’ own policies.  Using their personal 
devices, these employees 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, Osaic Services and Osaic Wealth employees sent and 
received off-channel communications that related to the broker-dealer businesses operated by 
Osaic Services and Osaic Wealth and with respect to Osaic Services’ and Osaic Wealth’s 
investment advisory businesses related to recommendations made or proposed to be made and 
advice given or proposed to be given.  Respondents did not maintain or preserve the substantial 
majority of these written communications.  Respondents’ failures were firm-wide, and involved 
employees at various levels of authority.  As a result, Osaic Services and Osaic Wealth violated 
Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder and Section 204 of the 
Advisers Act and Rule 204-2(a)(7) thereunder. 
4. Respondents’ supervisors, who were responsible for supervising junior 
employees, routinely communicated off-channel using their personal devices.  In fact, senior 
managers and department heads responsible for supervising junior employees themselves failed 
to comply with Respondents’ policies by communicating using non-firm approved methods on 
their personal devices about Respondents’ broker-dealer and/or investment adviser businesses, as 
applicable.  
5. Respondents’ widespread failure to implement their policies and procedures that 
prohibit such communications led to their failure to reasonably supervise their employees within 
the meaning of Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers 
Act.  
6. During the time period that Respondents failed to maintain and preserve 
off-channel communications that their employees sent and received related to the broker-dealer 
and investment adviser businesses, Respondents received and responded to Commission 
subpoenas for documents and/or records requests in numerous Commission investigations.  As a 
 
1
  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 
binding on any other person or entity in this or any other proceeding.  

 
 
3 
result, Respondents’ 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 uncovered Respondents’ misconduct after commencing a 
risk-based initiative to investigate the use of off-channel and unpreserved communications at 
broker-dealers.  Respondents have initiated a review of their recordkeeping failures and begun a 
program of remediation.  As set forth in the Undertakings below, Respondents will retain an 
independent compliance consultant to review and assess Respondents’ remedial steps relating to 
their recordkeeping practices, policies and procedures, related supervisory practices, and 
employment actions. 
Respondents 
8. Osaic Services, Inc. (“Osaic Services”) is a Delaware corporation with its 
principal office in Phoenix, Arizona and is registered with the Commission as a broker-dealer.  
Osaic Services also was previously registered with the Commission as an investment adviser 
from October 2005 until September 29, 2023, when its withdrawal of its registration on Form 
ADV-W became effective.  Osaic Services is a subsidiary of Osaic, Inc., a wholly-owned 
subsidiary of Osaic Holdings, Inc. 
9. Osaic Wealth, Inc. (“Osaic Wealth”) is a Delaware corporation with its principal 
office in Jersey City, New Jersey and is registered with the Commission as a broker-dealer and 
investment adviser.  Osaic Wealth is a subsidiary of Osaic, Inc., a wholly-owned subsidiary of 
Osaic Holdings, Inc.   
Recordkeeping Requirements under the Exchange and Advisers Acts 
10. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 
authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 
advisers 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. 
11. The Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 
under the Advisers 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 or investment advisers, 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 in an easily accessible place, originals of all 
communications received and copies of all communications sent relating to the firm’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. 

 
 
4 
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). 
14. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 
204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of all 
communications received and copies of all written communications sent relating to:  (a) any 
recommendation made or proposed to be made and any advice given or proposed to be given; 
(b) any receipt, disbursement or delivery of funds or securities; (c) the placing or execution of any 
order to purchase or sell any security; or (d) predecessor performance and the performance or rate 
of return of any or all managed accounts, portfolios, or securities recommendations. 
Osaic Services’ and Osaic Wealth’s Policies and Procedures 
15. Osaic Services and Osaic Wealth maintained certain policies and procedures 
designed to ensure the retention of business-related records, including electronic 
communications, in compliance with the relevant recordkeeping provisions.   
16. Osaic Services and Osaic Wealth employees 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 their personal devices.  
17. Messages sent through firm-approved communications methods were monitored, 
subject to review, and, when appropriate, archived.  Messages sent through unapproved 
communications methods, such as unapproved applications on personal devices, were not 
monitored, subject to review or archived. 
18. Respondents’ policies were designed to address supervisors’ supervision of 
employees’ training in Respondents’ communications policies and adherence to Respondents’ 
books and recordkeeping requirements.  Supervisory policies notified employees that electronic 
communications were subject to surveillance by Osaic Services and Osaic Wealth.  Osaic 
Services and Osaic Wealth had procedures for all employees, including supervisors, requiring 
annual self-attestations of compliance.  
19. Osaic Services and Osaic Wealth, however, failed to implement systems to 
determine that all personnel, including supervisors, were reasonably following Osaic Services’ 
and Osaic Wealth’s policies.  While permitting employees to use approved communications 
methods, including on personal phones, for business communications, Osaic Services and Osaic 
Wealth failed to implement sufficient monitoring to ensure that their recordkeeping and 
communications policies were being followed.  

 
 
5 
Osaic Services’ and Osaic Wealth’s Recordkeeping Failures Across Their Businesses 
20. 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.  A firm affiliated with Osaic Services and Osaic Wealth, which 
merged into Osaic Wealth in January 2024, 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 department 
heads and vice presidents.  Osaic Services and Osaic Wealth voluntarily expanded the scope of the 
investigation to include their own firms and other affiliated firms and reported their findings to 
Commission staff.   
21. The Commission staff’s investigation uncovered pervasive off-channel 
communications at various seniority levels of Osaic Services’ and Osaic Wealth’s broker-dealer 
businesses.  In addition, the Commission staff’s investigation uncovered the use of off-channel 
communications at various seniority levels within Osaic Services’ and Osaic Wealth’s investment 
advisory businesses.  The investigation determined that most broker-dealer and investment 
adviser 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 Osaic Services and Osaic Wealth personnel and external contacts in the securities industry.  
Within Osaic Services and Osaic Wealth, a number of senior leadership participated in off-
channel communications. 
22. From at least August 2019, Osaic Services and Osaic Wealth personnel sent and 
received off-channel communications that concerned the businesses of the broker-dealers.   
23. For example, from February 22, 2022 to August 18, 2022, a vice president at 
Osaic Services and Osaic Wealth exchanged numerous off-channel communications with at least 
21 colleagues and at least one external contact in the securities industry.  Within Osaic Services 
and Osaic Wealth, this vice president communicated off-channel with junior employees under 
their supervision.  These communications related to the broker-dealers’ businesses as such. 
24. Additionally, from March 3, 2022 to August 5, 2022, a department head at Osaic 
Services and Osaic Wealth exchanged numerous off-channel communications with at least 6 
colleagues, including with junior employees under their supervision.  These communications 
related to the broker-dealers’ businesses as such. 
25. From at least August 2019, Osaic Services and Osaic Wealth investment adviser 
personnel sent and received off-channel communications subject to the record-keeping 
requirements of Advisers Act Rule 204-2. 
26. For example, in June 2022, investment adviser personnel at Osaic Services and 
Osaic Wealth exchanged off-channel communications related to advice about investment 
recommendations made or proposed to be made for advisory client accounts. 

 
 
6 
Osaic Services’ and Osaic Wealth’s Failures to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
27. Between August 2019 and the present, Osaic Services and Osaic Wealth received 
and responded to Commission subpoenas for documents and/or records requests in Commission 
investigations.  By failing to maintain and preserve required records relating to their businesses, 
Osaic Services and Osaic Wealth likely deprived the Commission of these off-channel 
communications in various investigations. 
Osaic Services’ and Osaic Wealth’s Violations and Failure to Supervise 
28. As a result of the conduct described above, from at least August 2019 through the 
date of this Order, Osaic Services and Osaic Wealth willfully
2
 violated Section 17(a) of the 
Exchange Act and Rule 17a-4(b)(4) thereunder.   
29. As a result of the conduct described above, from at least August 2019 through the 
date of this Order, Osaic Services and Osaic Wealth willfully violated Section 204 of the Advisers 
Act and Rule 204-2(a)(7) thereunder. 
30. As a result of the conduct described above, Osaic Services and Osaic Wealth 
failed reasonably to supervise their employees with a view to preventing or detecting certain of 
their employees’ 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.  
31. As a result of the conduct described above, Osaic Services and Osaic Wealth failed 
reasonably to supervise their employees with a view to preventing or detecting certain of their 
employees’ aiding and abetting violations of Section 204 of the Advisers Act and Rule 204-
2(a)(7) thereunder, within the meaning of Section 203(e)(6) of the Advisers Act. 
Osaic Services’ and Osaic Wealth’s Remedial Efforts 
32. In determining to accept the Offers, the Commission considered steps promptly 
undertaken by Osaic Services and Osaic Wealth prior to and after being approached by 
Commission staff, including rolling out an on-channel external messaging application to their 
 
2
  “Willfully,” for purposes of imposing relief under Section 15(b) of the Exchange Act and 
Section 203(e) of the Advisers 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).  The decision in The Robare Group, Ltd. v. SEC, which construed the term 
“willfully” for purposes of a differently structured statutory provision, does not alter that 
standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing required to establish 
that a person has “willfully omit[ted]” material information from a required disclosure in 
violation of Section 207 of the Advisers Act). 

 
 
7 
employees in April 2021, conducting additional internal investigation and reporting their findings 
to Commission staff, and cooperation afforded the Commission staff. 
Undertakings 
33. Prior to this action, Respondents enhanced their policies and procedures, and 
increased training concerning the use of approved communications methods, including on 
personal devices, and began implementing significant changes to the technology available to 
employees.  In addition, Respondents have undertaken to: 
34. Independent Compliance Consultant. 
a.  Osaic Services and Osaic Wealth shall each 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 Osaic Services 
and Osaic Wealth. 
 
b.  Osaic Services and Osaic Wealth will oversee the work of the Compliance 
Consultant. 
 
c.  Osaic Services and Osaic Wealth 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.  Osaic Services and Osaic Wealth shall require 
that, within ninety (90) days of the date of the engagement letter, the Compliance 
Consultant conduct: 
 
i.  A comprehensive review of Osaic Services’ and Osaic Wealth’s 
supervisory, compliance, and other policies and procedures designed to ensure 
that Osaic Services’ and Osaic Wealth’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 Osaic Services and 
Osaic Wealth 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 Osaic Services and Osaic Wealth 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 
Osaic Services and Osaic Wealth 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. 

 
 
8 
 
iv.  An assessment of the technological solutions that Osaic Services and 
Osaic Wealth have begun implementing to meet the record retention requirements 
of the federal securities laws, including an assessment of the likelihood that Osaic 
Services and Osaic Wealth personnel will use the technological solutions going 
forward and a review of the measures employed by Osaic Services and Osaic 
Wealth to track employee usage of new technological solutions.  
 
v.  An assessment of the measures used by Osaic Services and Osaic 
Wealth to prevent the use of unauthorized communications methods for business 
communications by employees.  This assessment should include, but not be 
limited to, a review of Osaic Services’ and Osaic Wealth’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 Osaic Services’ and Osaic Wealth’s electronic 
communications surveillance routines to ensure that electronic communications 
through approved communications methods found on Personal Devices are 
incorporated into Osaic Services’ and Osaic Wealth’s overall communications 
surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Osaic Services 
and Osaic Wealth to address instances of non-compliance by Osaic Services and 
Osaic Wealth employees with Osaic Services’ and Osaic Wealth’s policies and 
procedures concerning the use of Personal Devices to communicate about Osaic 
Services and Osaic Wealth business in the past.  This review shall include a survey 
of how Osaic Services and Osaic Wealth determined which employees failed to 
comply with Osaic Services and Osaic Wealth 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.   
 
d.  Osaic Services and Osaic Wealth shall require that, within forty-five (45) days 
after completion of the review set forth in sub-paragraphs c.i. through c.vii. above, the 
Compliance Consultant shall submit a detailed written report of its findings to each of 
Osaic Services and Osaic Wealth and to the Commission staff (the “Report”).  Osaic 
Services and Osaic Wealth 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 Osaic Services’ and Osaic Wealth’s policies and procedures, and a 
summary of the plan for implementing the recommended changes in or improvements to 
Osaic Services’ and Osaic Wealth’s policies and procedures. 
 
e.  Osaic Services and Osaic Wealth shall adopt all recommendations contained in 
the Report within ninety (90) days of the date of the Report; provided, however, that 

 
 
9 
within forty-five (45) days after the date of the Report, Osaic Services and Osaic Wealth 
shall advise the Compliance Consultant and the Commission staff in writing of any 
recommendations that Osaic Services and Osaic Wealth consider to be unduly 
burdensome, impractical, or inappropriate.  With respect to any recommendation that 
Osaic Services and Osaic Wealth consider unduly burdensome, impractical, or 
inappropriate, Osaic Services and Osaic Wealth 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 Osaic Services’ and Osaic Wealth’s 
policies or procedures on which Osaic Services and Osaic Wealth and the Compliance 
Consultant do not agree, Osaic Services and Osaic Wealth 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 Osaic Services and Osaic Wealth and the Compliance Consultant, Osaic Services and 
Osaic Wealth shall require that the Compliance Consultant inform Osaic Services and 
Osaic Wealth and the Commission staff in writing of the Compliance Consultant’s final 
determination concerning any recommendation that Osaic Services and Osaic Wealth 
consider to be unduly burdensome, impractical, or inappropriate.  Osaic Services and 
Osaic Wealth shall abide by the determinations of the Compliance Consultant and, within 
sixty (60) days after final agreement between Osaic Services and Osaic Wealth and the 
Compliance Consultant or final determination by the Compliance Consultant, whichever 
occurs first, Osaic Services and Osaic Wealth shall adopt and implement all of the 
recommendations that the Compliance Consultant deems appropriate. 
 
g.  Osaic Services and Osaic Wealth shall cooperate fully with the Compliance 
Consultant and shall provide the Compliance Consultant with access to such of Osaic 
Services’ and Osaic Wealth’s files, books, records, and personnel as are reasonably 
requested by the Compliance Consultant for review. 
 
h. Osaic Services and Osaic Wealth 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.  
Osaic Services and Osaic Wealth 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 years from completion of 
the engagement, Osaic Services and Osaic Wealth 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. 

 
 
10 
 
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. 
 
35. One-Year Evaluation.  Osaic Services and Osaic Wealth shall each require the 
Compliance Consultant to assess Osaic Services’ and Osaic Wealth’s programs 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 34.d above.  Osaic Services and Osaic Wealth shall require this review to 
evaluate Osaic Services’ and Osaic Wealth’s progress in the areas described in Paragraphs 
34.c.i-vii above.  After this review, Osaic Services and Osaic Wealth shall require the 
Compliance Consultant to submit a report (the “One Year Report”) to each of Osaic Services and 
Osaic Wealth and the Commission staff and shall ensure that the One Year Report includes an 
updated assessment of Osaic Services’ and Osaic Wealth’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.  
36. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Osaic Services and Osaic Wealth shall notify the Commission staff as follows upon the imposition 
of any discipline imposed by Osaic Services and Osaic Wealth, including, but not limited to, 
written warnings, loss of any pay, bonus, or incentive compensation, or the termination of 
employment, with respect to any employee found to have violated Osaic Services’ and Osaic 
Wealth’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.   
37. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, Osaic Services and Osaic Wealth will each also have their respective Internal 
Audit function conduct a separate audit(s) to assess Osaic Services’ and Osaic Wealth’s progress in 
the areas described in Paragraphs 34.c.i-vii above.  After completion of this audit(s), Osaic 
Services and Osaic Wealth shall ensure that Internal Audit submits a report to each of Osaic 
Services and Osaic Wealth and to the Commission staff. 
38. Recordkeeping.  Osaic Services and Osaic Wealth shall each 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. 
39. 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 

 
 
11 
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. 
40. Certification.  Osaic Services and Osaic Wealth shall each 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 Respondents agree to provide such 
evidence.  The certification and supporting material shall be submitted to Anne C. McKinley, 
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 Respondents’ Offers. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act and Sections 
203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 
 
A. Respondents 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. Respondents cease and desist from committing or causing any violations and any 
future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 
C. Respondents are censured.  
D. Respondents shall comply with the undertakings enumerated in paragraphs 33 to 
40 above. 
E. Respondents shall, jointly and severally, within 14 days of the entry of this Order, 
pay a civil money penalty in the amount of $18,000,000 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).  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) Respondents may transmit payment electronically to the Commission, 
which will provide detailed ACH transfer/Fedwire instructions upon 
request;  
 
(2) Respondents 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  

 
 
12 
 
(3) Respondents 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 
Osaic Services and Osaic Wealth as the Respondents 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 Anne C. 
McKinley, Assistant Regional Director, Division of Enforcement, Chicago Regional Office, 175 
West Jackson Boulevard, Suite 1450, Chicago, Illinois 60604.  
  
F. 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, Respondents agree that in any Related Investor 
Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction 
of any award of compensatory damages by the amount of any part of Respondents’ payment of a 
civil penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants 
such a Penalty Offset, Respondents agree that they 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.  For purposes of this paragraph, a “Related Investor 
Action” means a private damages action brought against Respondents 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. 100701/ August 14, 2024 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6651 / August 14, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21997 

 

 

In the Matter of 

 

Osaic Services, Inc. and 

Osaic Wealth, Inc., 

 

Respondents. 

 

ORDER INSTITUTING ADMINISTRATIVE 

AND CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTIONS 15(b) AND 21C 

OF THE SECURITIES EXCHANGE ACT OF 

1934 AND SECTIONS 203(e) AND 203(k) OF 

THE INVESTMENT ADVISERS ACT OF 

1940, 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”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 

(“Advisers Act”) against Osaic Services, Inc. (“Osaic Services”) and Osaic Wealth, Inc. (“Osaic 

Wealth”) (collectively, “Respondents”). 

 

II. 

 In anticipation of the institution of these proceedings, Respondents have submitted Offers 

of Settlement (“Offers”) that the Commission has determined to accept.  Respondents admit the 

facts set forth in Section III below, acknowledge that their conduct violated the federal securities 

laws, admit the Commission’s jurisdiction over them and the subject matter of these proceedings, 

and consent 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 and 

Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and 

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

 



 

 

2 

III. 

 On the basis of this Order and Respondents’ Offers, the Commission finds1 that: 

 

Summary 

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

and registered investment advisers 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 Osaic 

Services and Osaic Wealth employees throughout the firms, including at senior levels, to adhere 

to certain of these essential requirements and the firms’ own policies.  Using their personal 

devices, these employees 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, Osaic Services and Osaic Wealth employees sent and 

received off-channel communications that related to the broker-dealer businesses operated by 

Osaic Services and Osaic Wealth and with respect to Osaic Services’ and Osaic Wealth’s 

investment advisory businesses related to recommendations made or proposed to be made and 

advice given or proposed to be given.  Respondents did not maintain or preserve the substantial 

majority of these written communications.  Respondents’ failures were firm-wide, and involved 

employees at various levels of authority.  As a result, Osaic Services and Osaic Wealth violated 

Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder and Section 204 of the 

Advisers Act and Rule 204-2(a)(7) thereunder. 

4. Respondents’ supervisors, who were responsible for supervising junior 

employees, routinely communicated off-channel using their personal devices.  In fact, senior 

managers and department heads responsible for supervising junior employees themselves failed 

to comply with Respondents’ policies by communicating using non-firm approved methods on 

their personal devices about Respondents’ broker-dealer and/or investment adviser businesses, as 

applicable.  

5. Respondents’ widespread failure to implement their policies and procedures that 

prohibit such communications led to their failure to reasonably supervise their employees within 

the meaning of Section 15(b)(4)(E) of the Exchange Act and Section 203(e)(6) of the Advisers 

Act.  

6. During the time period that Respondents failed to maintain and preserve 

off-channel communications that their employees sent and received related to the broker-dealer 

and investment adviser businesses, Respondents received and responded to Commission 

subpoenas for documents and/or records requests in numerous Commission investigations.  As a 

 
1  The findings herein are made pursuant to Respondents’ Offers of Settlement and are not 

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



 

 

3 

result, Respondents’ 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 uncovered Respondents’ misconduct after commencing a 

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

broker-dealers.  Respondents have initiated a review of their recordkeeping failures and begun a 

program of remediation.  As set forth in the Undertakings below, Respondents will retain an 

independent compliance consultant to review and assess Respondents’ remedial steps relating to 

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

employment actions. 

Respondents 

8. Osaic Services, Inc. (“Osaic Services”) is a Delaware corporation with its 

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

Osaic Services also was previously registered with the Commission as an investment adviser 

from October 2005 until September 29, 2023, when its withdrawal of its registration on Form 

ADV-W became effective.  Osaic Services is a subsidiary of Osaic, Inc., a wholly-owned 

subsidiary of Osaic Holdings, Inc. 

9. Osaic Wealth, Inc. (“Osaic Wealth”) is a Delaware corporation with its principal 

office in Jersey City, New Jersey and is registered with the Commission as a broker-dealer and 

investment adviser.  Osaic Wealth is a subsidiary of Osaic, Inc., a wholly-owned subsidiary of 

Osaic Holdings, Inc.   

Recordkeeping Requirements under the Exchange and Advisers Acts 

10. Section 17(a)(1) of the Exchange Act and Section 204 of the Advisers Act 

authorize the Commission to issue rules requiring, respectively, broker-dealers and investment 

advisers 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. 

11. The Commission adopted Rule 17a-4 under the Exchange Act and Rule 204-2 

under the Advisers 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 or investment advisers, 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 in an easily accessible place, originals of all 

communications received and copies of all communications sent relating to the firm’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. 



 

 

4 

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). 

14. The rules adopted under Advisers Act Section 204, including Advisers Act Rule 

204-2(a)(7), require that investment advisers preserve in an easily accessible place originals of all 

communications received and copies of all written communications sent relating to:  (a) any 

recommendation made or proposed to be made and any advice given or proposed to be given; 

(b) any receipt, disbursement or delivery of funds or securities; (c) the placing or execution of any 

order to purchase or sell any security; or (d) predecessor performance and the performance or rate 

of return of any or all managed accounts, portfolios, or securities recommendations. 

Osaic Services’ and Osaic Wealth’s Policies and Procedures 

15. Osaic Services and Osaic Wealth maintained certain policies and procedures 

designed to ensure the retention of business-related records, including electronic 

communications, in compliance with the relevant recordkeeping provisions.   

16. Osaic Services and Osaic Wealth employees 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 their personal devices.  

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

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

communications methods, such as unapproved applications on personal devices, were not 

monitored, subject to review or archived. 

18. Respondents’ policies were designed to address supervisors’ supervision of 

employees’ training in Respondents’ communications policies and adherence to Respondents’ 

books and recordkeeping requirements.  Supervisory policies notified employees that electronic 

communications were subject to surveillance by Osaic Services and Osaic Wealth.  Osaic 

Services and Osaic Wealth had procedures for all employees, including supervisors, requiring 

annual self-attestations of compliance.  

19. Osaic Services and Osaic Wealth, however, failed to implement systems to 

determine that all personnel, including supervisors, were reasonably following Osaic Services’ 

and Osaic Wealth’s policies.  While permitting employees to use approved communications 

methods, including on personal phones, for business communications, Osaic Services and Osaic 

Wealth failed to implement sufficient monitoring to ensure that their recordkeeping and 

communications policies were being followed.  



 

 

5 

Osaic Services’ and Osaic Wealth’s Recordkeeping Failures Across Their Businesses 

20. 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.  A firm affiliated with Osaic Services and Osaic Wealth, which 

merged into Osaic Wealth in January 2024, 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 department 

heads and vice presidents.  Osaic Services and Osaic Wealth voluntarily expanded the scope of the 

investigation to include their own firms and other affiliated firms and reported their findings to 

Commission staff.   

21. The Commission staff’s investigation uncovered pervasive off-channel 

communications at various seniority levels of Osaic Services’ and Osaic Wealth’s broker-dealer 

businesses.  In addition, the Commission staff’s investigation uncovered the use of off-channel 

communications at various seniority levels within Osaic Services’ and Osaic Wealth’s investment 

advisory businesses.  The investigation determined that most broker-dealer and investment 

adviser 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 Osaic Services and Osaic Wealth personnel and external contacts in the securities industry.  

Within Osaic Services and Osaic Wealth, a number of senior leadership participated in off-

channel communications. 

22. From at least August 2019, Osaic Services and Osaic Wealth personnel sent and 

received off-channel communications that concerned the businesses of the broker-dealers.   

23. For example, from February 22, 2022 to August 18, 2022, a vice president at 

Osaic Services and Osaic Wealth exchanged numerous off-channel communications with at least 

21 colleagues and at least one external contact in the securities industry.  Within Osaic Services 

and Osaic Wealth, this vice president communicated off-channel with junior employees under 

their supervision.  These communications related to the broker-dealers’ businesses as such. 

24. Additionally, from March 3, 2022 to August 5, 2022, a department head at Osaic 

Services and Osaic Wealth exchanged numerous off-channel communications with at least 6 

colleagues, including with junior employees under their supervision.  These communications 

related to the broker-dealers’ businesses as such. 

25. From at least August 2019, Osaic Services and Osaic Wealth investment adviser 

personnel sent and received off-channel communications subject to the record-keeping 

requirements of Advisers Act Rule 204-2. 

26. For example, in June 2022, investment adviser personnel at Osaic Services and 

Osaic Wealth exchanged off-channel communications related to advice about investment 

recommendations made or proposed to be made for advisory client accounts. 



 

 

6 

Osaic Services’ and Osaic Wealth’s Failures to Preserve Required Records Potentially 

Compromised and Delayed Commission Matters 

27. Between August 2019 and the present, Osaic Services and Osaic Wealth received 

and responded to Commission subpoenas for documents and/or records requests in Commission 

investigations.  By failing to maintain and preserve required records relating to their businesses, 

Osaic Services and Osaic Wealth likely deprived the Commission of these off-channel 

communications in various investigations. 

Osaic Services’ and Osaic Wealth’s Violations and Failure to Supervise 

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

date of this Order, Osaic Services and Osaic Wealth willfully2 violated Section 17(a) of the 

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

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

date of this Order, Osaic Services and Osaic Wealth willfully violated Section 204 of the Advisers 

Act and Rule 204-2(a)(7) thereunder. 

30. As a result of the conduct described above, Osaic Services and Osaic Wealth 

failed reasonably to supervise their employees with a view to preventing or detecting certain of 

their employees’ 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.  

31. As a result of the conduct described above, Osaic Services and Osaic Wealth failed 

reasonably to supervise their employees with a view to preventing or detecting certain of their 

employees’ aiding and abetting violations of Section 204 of the Advisers Act and Rule 204-

2(a)(7) thereunder, within the meaning of Section 203(e)(6) of the Advisers Act. 

Osaic Services’ and Osaic Wealth’s Remedial Efforts 

32. In determining to accept the Offers, the Commission considered steps promptly 

undertaken by Osaic Services and Osaic Wealth prior to and after being approached by 

Commission staff, including rolling out an on-channel external messaging application to their 

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

Section 203(e) of the Advisers 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).  The decision in The Robare Group, Ltd. v. SEC, which construed the term 

“willfully” for purposes of a differently structured statutory provision, does not alter that 

standard.  922 F.3d 468, 478-79 (D.C. Cir. 2019) (setting forth the showing required to establish 

that a person has “willfully omit[ted]” material information from a required disclosure in 

violation of Section 207 of the Advisers Act). 



 

 

7 

employees in April 2021, conducting additional internal investigation and reporting their findings 

to Commission staff, and cooperation afforded the Commission staff. 

Undertakings 

33. Prior to this action, Respondents enhanced their policies and procedures, and 

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

personal devices, and began implementing significant changes to the technology available to 

employees.  In addition, Respondents have undertaken to: 

34. Independent Compliance Consultant. 

a.  Osaic Services and Osaic Wealth shall each 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 Osaic Services 

and Osaic Wealth. 

 

b.  Osaic Services and Osaic Wealth will oversee the work of the Compliance 

Consultant. 

 

c.  Osaic Services and Osaic Wealth 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.  Osaic Services and Osaic Wealth shall require 

that, within ninety (90) days of the date of the engagement letter, the Compliance 

Consultant conduct: 

 

i.  A comprehensive review of Osaic Services’ and Osaic Wealth’s 

supervisory, compliance, and other policies and procedures designed to ensure 

that Osaic Services’ and Osaic Wealth’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 Osaic Services and 

Osaic Wealth 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 Osaic Services and Osaic Wealth 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 

Osaic Services and Osaic Wealth 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. 



 

 

8 

 

iv.  An assessment of the technological solutions that Osaic Services and 

Osaic Wealth have begun implementing to meet the record retention requirements 

of the federal securities laws, including an assessment of the likelihood that Osaic 

Services and Osaic Wealth personnel will use the technological solutions going 

forward and a review of the measures employed by Osaic Services and Osaic 

Wealth to track employee usage of new technological solutions.  

 

v.  An assessment of the measures used by Osaic Services and Osaic 

Wealth to prevent the use of unauthorized communications methods for business 

communications by employees.  This assessment should include, but not be 

limited to, a review of Osaic Services’ and Osaic Wealth’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 Osaic Services’ and Osaic Wealth’s electronic 

communications surveillance routines to ensure that electronic communications 

through approved communications methods found on Personal Devices are 

incorporated into Osaic Services’ and Osaic Wealth’s overall communications 

surveillance program.   

 

vii.  A comprehensive review of the framework adopted by Osaic Services 

and Osaic Wealth to address instances of non-compliance by Osaic Services and 

Osaic Wealth employees with Osaic Services’ and Osaic Wealth’s policies and 

procedures concerning the use of Personal Devices to communicate about Osaic 

Services and Osaic Wealth business in the past.  This review shall include a survey 

of how Osaic Services and Osaic Wealth determined which employees failed to 

comply with Osaic Services and Osaic Wealth 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.   

 

d.  Osaic Services and Osaic Wealth shall require that, within forty-five (45) days 

after completion of the review set forth in sub-paragraphs c.i. through c.vii. above, the 

Compliance Consultant shall submit a detailed written report of its findings to each of 

Osaic Services and Osaic Wealth and to the Commission staff (the “Report”).  Osaic 

Services and Osaic Wealth 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 Osaic Services’ and Osaic Wealth’s policies and procedures, and a 

summary of the plan for implementing the recommended changes in or improvements to 

Osaic Services’ and Osaic Wealth’s policies and procedures. 

 

e.  Osaic Services and Osaic Wealth shall adopt all recommendations contained in 

the Report within ninety (90) days of the date of the Report; provided, however, that 



 

 

9 

within forty-five (45) days after the date of the Report, Osaic Services and Osaic Wealth 

shall advise the Compliance Consultant and the Commission staff in writing of any 

recommendations that Osaic Services and Osaic Wealth consider to be unduly 

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

Osaic Services and Osaic Wealth consider unduly burdensome, impractical, or 

inappropriate, Osaic Services and Osaic Wealth 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 Osaic Services’ and Osaic Wealth’s 

policies or procedures on which Osaic Services and Osaic Wealth and the Compliance 

Consultant do not agree, Osaic Services and Osaic Wealth 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 Osaic Services and Osaic Wealth and the Compliance Consultant, Osaic Services and 

Osaic Wealth shall require that the Compliance Consultant inform Osaic Services and 

Osaic Wealth and the Commission staff in writing of the Compliance Consultant’s final 

determination concerning any recommendation that Osaic Services and Osaic Wealth 

consider to be unduly burdensome, impractical, or inappropriate.  Osaic Services and 

Osaic Wealth shall abide by the determinations of the Compliance Consultant and, within 

sixty (60) days after final agreement between Osaic Services and Osaic Wealth and the 

Compliance Consultant or final determination by the Compliance Consultant, whichever 

occurs first, Osaic Services and Osaic Wealth shall adopt and implement all of the 

recommendations that the Compliance Consultant deems appropriate. 

 

g.  Osaic Services and Osaic Wealth shall cooperate fully with the Compliance 

Consultant and shall provide the Compliance Consultant with access to such of Osaic 

Services’ and Osaic Wealth’s files, books, records, and personnel as are reasonably 

requested by the Compliance Consultant for review. 

 

h. Osaic Services and Osaic Wealth 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.  

Osaic Services and Osaic Wealth 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 years from completion of 

the engagement, Osaic Services and Osaic Wealth 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. 



 

 

10 

 

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. 

 

35. One-Year Evaluation.  Osaic Services and Osaic Wealth shall each require the 

Compliance Consultant to assess Osaic Services’ and Osaic Wealth’s programs 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 34.d above.  Osaic Services and Osaic Wealth shall require this review to 

evaluate Osaic Services’ and Osaic Wealth’s progress in the areas described in Paragraphs 

34.c.i-vii above.  After this review, Osaic Services and Osaic Wealth shall require the 

Compliance Consultant to submit a report (the “One Year Report”) to each of Osaic Services and 

Osaic Wealth and the Commission staff and shall ensure that the One Year Report includes an 

updated assessment of Osaic Services’ and Osaic Wealth’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.  

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

Osaic Services and Osaic Wealth shall notify the Commission staff as follows upon the imposition 

of any discipline imposed by Osaic Services and Osaic Wealth, including, but not limited to, 

written warnings, loss of any pay, bonus, or incentive compensation, or the termination of 

employment, with respect to any employee found to have violated Osaic Services’ and Osaic 

Wealth’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.   

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

the One Year Report, Osaic Services and Osaic Wealth will each also have their respective Internal 

Audit function conduct a separate audit(s) to assess Osaic Services’ and Osaic Wealth’s progress in 

the areas described in Paragraphs 34.c.i-vii above.  After completion of this audit(s), Osaic 

Services and Osaic Wealth shall ensure that Internal Audit submits a report to each of Osaic 

Services and Osaic Wealth and to the Commission staff. 

38. Recordkeeping.  Osaic Services and Osaic Wealth shall each 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. 

39. 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 



 

 

11 

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. 

40. Certification.  Osaic Services and Osaic Wealth shall each 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 Respondents agree to provide such 

evidence.  The certification and supporting material shall be submitted to Anne C. McKinley, 

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 Respondents’ Offers. 

 

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

203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that: 

 

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

future violations of Section 204 of the Advisers Act and Rule 204-2 thereunder. 

C. Respondents are censured.  

D. Respondents shall comply with the undertakings enumerated in paragraphs 33 to 

40 above. 

E. Respondents shall, jointly and severally, within 14 days of the entry of this Order, 

pay a civil money penalty in the amount of $18,000,000 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).  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) Respondents may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;  

 

(2) Respondents 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  



 

 

12 

 

(3) Respondents 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 

Osaic Services and Osaic Wealth as the Respondents 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 Anne C. 

McKinley, Assistant Regional Director, Division of Enforcement, Chicago Regional Office, 175 

West Jackson Boulevard, Suite 1450, Chicago, Illinois 60604.  

  

F. 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, Respondents agree that in any Related Investor 

Action, they shall not argue that they are entitled to, nor shall they benefit by, offset or reduction 

of any award of compensatory damages by the amount of any part of Respondents’ payment of a 

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

such a Penalty Offset, Respondents agree that they 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.  For purposes of this paragraph, a “Related Investor 

Action” means a private damages action brought against Respondents 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