In re Cambridge Investment

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 99498 / February 9, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6547 / February 9, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-  21847 
 
 
In the Matter of 
 
Cambridge Investment 
Research, Inc. and Cambridge 
Investment Research Advisors, 
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”) against Cambridge Investment Research, Inc. (“CIR”) and Sections 203(e) and 
203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) against Cambridge Investment 
Research Advisors, Inc. (“CIRA”) ( collectively, “Respondents” or “Cambridge”). 
 
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.   
 

 
 
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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 
Cambridge 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 personal text messages (“off-channel 
communications”). 
3. From at least January 2019, CIR employees sent and received off-channel 
communications that related to the business of the broker-dealer, and CIRA employees sent and 
received off-channel communications that 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, CIR violated Section 17(a) of 
the Exchange Act and Rule 17a-4(b)(4) thereunder and CIRA violated Section 204 of the 
Advisers Act and Rule 204-2(a)(7) thereunder. 
4. Cambridge’s 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 
Cambridge’s policies by communicating using non-Cambridge approved methods on their 
personal devices about Cambridge’s broker-dealer and/or investment adviser businesses, as 
applicable.  
5. Cambridge’s 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 as to CIR and Section 203(e)(6) of the 
Advisers Act as to CIRA.  
6. During the time period that Cambridge failed to maintain and preserve 
off-channel communications that their employees sent and received related to the broker-dealer 
and investment adviser businesses, Cambridge received and responded to Commission 
subpoenas for documents and/or records requests in numerous Commission investigations.  As a 
result, Cambridge’s recordkeeping failures likely impacted the Commission’s ability to carry out 
 
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 
its regulatory functions and investigate violations of the federal securities laws across these 
investigations.   
7. Commission staff uncovered Cambridge’s misconduct after commencing a 
risk-based initiative to investigate the use of off-channel and unpreserved communications at 
broker-dealers.  Cambridge has initiated a review of their recordkeeping failures and begun a 
program of remediation.  As set forth in the Undertakings below, Cambridge will retain an 
independent compliance consultant to review and assess Cambridge’s remedial steps relating to 
Cambridge’s recordkeeping practices, policies and procedures, related supervisory practices, and 
employment actions. 
Respondents 
8. Cambridge Investment Research, Inc. is an Iowa corporation with its principal 
office in Fairfield, Iowa and is registered with the Commission as a broker-dealer.   It is a 
subsidiary of Cambridge Investment Group, Inc., a holding company headquartered in Fairfield, 
Iowa and incorporated in Iowa. 
9. Cambridge Investment Research Advisors, Inc. is an Iowa corporation with its 
principal office in Fairfield, Iowa and is registered with the Commission as an investment adviser.  
It is a subsidiary of Cambridge Investment Group, Inc., a holding company headquartered in 
Fairfield, Iowa and incorporated in Iowa.  
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 otherwise in 
furtherance of the purposes of the Exchange Act and the Advisers 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.  
13. 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, among other 

 
 
4 
things, any recommendation made or proposed to be made and any advice given or proposed to be 
given. 
14. 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). 
Cambridge’s
 Policies and Procedures 
15. Cambridge 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. Cambridge 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 Cambridge-approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Absent steps taken by individual 
personnel to preserve work-related communications, messages sent through unapproved 
communications methods, such as unapproved applications on personal devices, were not 
monitored, subject to review or archived. 
18. Cambridge policies were designed to address supervisors’ supervision of 
employees’ training in Cambridge’s communications policies and adherence to Cambridge’s 
books and recordkeeping requirements.  Supervisory policies notified employees that electronic 
communications were subject to surveillance by Cambridge.  Cambridge had procedures for all 
employees, including supervisors, requiring annual self-attestations of compliance.  
19. Cambridge, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Cambridge’s policies.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Cambridge failed to implement sufficient monitoring to assure that their 
recordkeeping and communications policies were being followed.  
Cambridge’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.  Cambridge cooperated with the investigation by voluntarily 
interviewing a sampling of senior personnel and gathering and reviewing messages found on the 

 
 
5 
individuals’ personal devices.  These personnel included senior leadership, such as department 
heads and vice presidents. 
21. The Commission staff’s investigation uncovered pervasive off-channel 
communications at various seniority levels of CIR.  In addition, the Commission staff’s 
investigation uncovered the use of off-channel communications within CIRA.  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 Cambridge personnel and external 
contacts in the securities industry.  Within Cambridge, a number of senior leadership participated 
in off-channel communications. 
22. From at least January 2019, CIR personnel sent and received off-channel 
messages that concerned the broker-dealer’s business.   
23. For example, from January 10, 2022 to June 29, 2022, a CIR vice president who 
was also an employee of CIRA exchanged numerous off-channel messages with at least six CIR 
and CIRA colleagues, including with junior employees under their supervision.  These messages 
related to the broker-dealer’s business as such. 
24. In addition, from January 14, 2022 to June 29, 2022, a CIR division head who 
was also an employee of CIRA exchanged numerous off-channel messages with at least four CIR 
and CIRA colleagues.  These messages related to the broker-dealer’s business as such.   
25. As another example, from January 25, 2022 to March 30, 2022, a CIR vice 
president exchanged numerous off-channel messages with at least three CIR colleagues and at 
least one external contact in the securities industry.  These messages related to the 
broker-dealer’s business as such. 
26. From at least January 2019, CIRA personnel sent and received off-channel 
messages related to, among other things, providing and recommending investment advice to 
clients. 
27. For example, in June 2022, a CIRA vice president exchanged off-channel messages 
with a CIRA colleague related to, among other things, investment advice provided to clients. 
Cambridge’s    Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 
28. Between January 2019 and the present, Cambridge 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, Cambridge 
likely deprived the Commission of these off-channel communications in various investigations. 

 
 
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Cambridge’s    Violations and Failure to Supervise 
29. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, CIR willfully
2
 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   
30. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, CIRA willfully violated Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder, which require investment advisers to preserve in an easily accessible place originals of 
all    written communications received and copies of all    written communications sent relating to, 
among other things, any recommendation made or proposed to be made and any advice given or 
proposed to be given. 
31. As a result of the conduct described above, CIR failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its 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.  
32. As a result of the conduct described above, CIRA failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its 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. 
Cambridge’s    Remedial Efforts 
33. In determining to accept the Offers, the Commission considered steps promptly 
undertaken by Cambridge prior to and after being approached by Commission staff, including 
rolling out an on-channel texting application to Cambridge employees in October 2019, and 
cooperation afforded the Commission staff. 
Undertakings 
34. Prior to this action, Cambridge enhanced their policies and procedures, and 
increased training concerning the use of approved communications methods, including on 
 
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 
personal devices, and began implementing significant changes to the technology available to 
employees.  In addition, Respondents have undertaken to: 
35. Independent Compliance Consultant. 
a.  CIR and CIRA 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 Cambridge. 
 
b.  Cambridge will oversee the work of the Compliance Consultant. 
 
c.  Cambridge 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.  Cambridge shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 
 
i.  A comprehensive review of Cambridge’s supervisory, compliance, and 
other policies and procedures designed to ensure that Cambridge’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 Cambridge 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 Cambridge 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 
Cambridge 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 Cambridge has 
begun implementing to meet the record retention requirements of the federal 
securities laws, including an assessment of the likelihood that Cambridge 
personnel will use the technological solutions going forward and a review of the 
measures employed by Cambridge to track employee usage of new technological 
solutions.  
 
v.  An assessment of the measures used by Cambridge 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 

 
 
8 
Cambridge’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 Cambridge’s electronic communications surveillance 
routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into 
Cambridge’s overall communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by Cambridge to 
address instances of non-compliance by Cambridge employees with Cambridge’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Cambridge business in the past.  This review shall include a survey of how 
Cambridge determined which employees failed to comply with Cambridge 
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.  Cambridge 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 CIR and CIRA 
and to the Commission staff (the “Report”).  Cambridge 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 Cambridge’s policies and 
procedures, and a summary of the plan for implementing the recommended changes in or 
improvements to Cambridge’s policies and procedures. 
 
e.  Cambridge 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, Cambridge shall advise the Compliance Consultant and 
the Commission staff in writing of any recommendations that Cambridge considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Cambridge considers unduly burdensome, impractical, or inappropriate, Cambridge 
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 Cambridge’s policies or procedures on 
which Cambridge and the Compliance Consultant do not agree, Cambridge 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 Cambridge and the Compliance Consultant, Cambridge 
shall require that the Compliance Consultant inform Cambridge and the Commission 
staff in writing of the Compliance Consultant’s final determination concerning any 

 
 
9 
recommendation that Cambridge considers to be unduly burdensome, impractical, or 
inappropriate.  Cambridge shall abide by the determinations of the Compliance 
Consultant and, within sixty (60) days after final agreement between Cambridge and the 
Compliance Consultant or final determination by the Compliance Consultant, whichever 
occurs first, Cambridge shall adopt and implement all of the recommendations that the 
Compliance Consultant deems appropriate. 
 
g.  Cambridge shall cooperate fully with the Compliance Consultant and shall 
provide the Compliance Consultant with access to such of Cambridge’s files, books, 
records, and personnel as are reasonably requested by the Compliance Consultant for 
review. 
 
h. Cambridge 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.  Cambridge 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, Cambridge 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. 
 
36. One-Year Evaluation.  CIR and CIRA shall each require the Compliance 
Consultant to assess Cambridge’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 35.d above.  Cambridge 
shall require this review to evaluate Cambridge’s progress in the areas described in Paragraph 
35.c.i-vii above.  After this review, Cambridge shall require the Compliance Consultant to 
submit a report (the “One Year Report”) to each of CIR and CIRA and the Commission staff and 
shall ensure that the One Year Report includes an updated assessment of Cambridge’s policies 

 
 
10 
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.  
37. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Cambridge shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Cambridge, 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 Cambridge’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.   
38. I
nternal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, CIR and CIRA will each also have their respective Internal Audit function 
conduct a separate audit(s) to assess Cambridge’s progress in the areas described in Paragraph 
35.c.i-vii above.  After completion of this audit(s), Cambridge shall ensure that Internal Audit 
submits a report to CIR and CIRA and to the Commission staff. 
39. Recordkeeping.  CIR 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.  CIRA shall preserve any record of compliance 
with t hese undertakings in an easily accessible place for a period of not less than five (5) years 
from the end of the fiscal year during which the entry was made on such record, the first two (2) 
years in an appropriate office of CIRA. 
40. D
eadlines.  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. 
41. Certification.  CIR and CIRA 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. 
 

 
 
11 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act as to CIR and 
Sections 203(e) and 203(k) of the Advisers Act as to CIRA, it is hereby ORDERED that: 
 
A. CIR 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. CIRA 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 34 to 
41 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 $10,000,000 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  
 
(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 
CIR and CIRA 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.   
 
  

 
 
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 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. 99498 / February 9, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6547 / February 9, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No.  3-21847 
 
 
In the Matter of 
 

Cambridge Investment 
Research, Inc. and Cambridge 
Investment Research Advisors, 
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”) against Cambridge Investment Research, Inc. (“CIR”) and Sections 203(e) and 
203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) against Cambridge Investment 
Research Advisors, Inc. (“CIRA”) (collectively, “Respondents” or “Cambridge”). 

 
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 
Cambridge 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 personal text messages (“off-channel 
communications”). 

3. From at least January 2019, CIR employees sent and received off-channel 
communications that related to the business of the broker-dealer, and CIRA employees sent and 
received off-channel communications that 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, CIR violated Section 17(a) of 
the Exchange Act and Rule 17a-4(b)(4) thereunder and CIRA violated Section 204 of the 
Advisers Act and Rule 204-2(a)(7) thereunder. 

4. Cambridge’s 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 
Cambridge’s policies by communicating using non-Cambridge approved methods on their 
personal devices about Cambridge’s broker-dealer and/or investment adviser businesses, as 
applicable.  

5. Cambridge’s 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 as to CIR and Section 203(e)(6) of the 
Advisers Act as to CIRA.  

6. During the time period that Cambridge failed to maintain and preserve 
off-channel communications that their employees sent and received related to the broker-dealer 
and investment adviser businesses, Cambridge received and responded to Commission 
subpoenas for documents and/or records requests in numerous Commission investigations.  As a 
result, Cambridge’s recordkeeping failures likely impacted the Commission’s ability to carry out 

 
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 

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

7. Commission staff uncovered Cambridge’s misconduct after commencing a 
risk-based initiative to investigate the use of off-channel and unpreserved communications at 
broker-dealers.  Cambridge has initiated a review of their recordkeeping failures and begun a 
program of remediation.  As set forth in the Undertakings below, Cambridge will retain an 
independent compliance consultant to review and assess Cambridge’s remedial steps relating to 
Cambridge’s recordkeeping practices, policies and procedures, related supervisory practices, and 
employment actions. 

Respondents 

8. Cambridge Investment Research, Inc. is an Iowa corporation with its principal 
office in Fairfield, Iowa and is registered with the Commission as a broker-dealer.  It is a 
subsidiary of Cambridge Investment Group, Inc., a holding company headquartered in Fairfield, 
Iowa and incorporated in Iowa. 

9. Cambridge Investment Research Advisors, Inc. is an Iowa corporation with its 
principal office in Fairfield, Iowa and is registered with the Commission as an investment adviser.  
It is a subsidiary of Cambridge Investment Group, Inc., a holding company headquartered in 
Fairfield, Iowa and incorporated in Iowa.  

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 otherwise in 
furtherance of the purposes of the Exchange Act and the Advisers 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.  

13. 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, among other 



 
 

4 

things, any recommendation made or proposed to be made and any advice given or proposed to be 
given. 

14. 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). 

Cambridge’s Policies and Procedures 

15. Cambridge 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. Cambridge 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 Cambridge-approved communications methods were 
monitored, subject to review, and, when appropriate, archived.  Absent steps taken by individual 
personnel to preserve work-related communications, messages sent through unapproved 
communications methods, such as unapproved applications on personal devices, were not 
monitored, subject to review or archived. 

18. Cambridge policies were designed to address supervisors’ supervision of 
employees’ training in Cambridge’s communications policies and adherence to Cambridge’s 
books and recordkeeping requirements.  Supervisory policies notified employees that electronic 
communications were subject to surveillance by Cambridge.  Cambridge had procedures for all 
employees, including supervisors, requiring annual self-attestations of compliance.  

19. Cambridge, however, failed to implement a system of follow-up and review to 
determine that supervisors were reasonably following Cambridge’s policies.  While permitting 
employees to use approved communications methods, including on personal phones, for business 
communications, Cambridge failed to implement sufficient monitoring to assure that their 
recordkeeping and communications policies were being followed.  

Cambridge’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.  Cambridge cooperated with the investigation by voluntarily 
interviewing a sampling of senior personnel and gathering and reviewing messages found on the 



 
 

5 

individuals’ personal devices.  These personnel included senior leadership, such as department 
heads and vice presidents. 

21. The Commission staff’s investigation uncovered pervasive off-channel 
communications at various seniority levels of CIR.  In addition, the Commission staff’s 
investigation uncovered the use of off-channel communications within CIRA.  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 Cambridge personnel and external 
contacts in the securities industry.  Within Cambridge, a number of senior leadership participated 
in off-channel communications. 

22. From at least January 2019, CIR personnel sent and received off-channel 
messages that concerned the broker-dealer’s business.   

23. For example, from January 10, 2022 to June 29, 2022, a CIR vice president who 
was also an employee of CIRA exchanged numerous off-channel messages with at least six CIR 
and CIRA colleagues, including with junior employees under their supervision.  These messages 
related to the broker-dealer’s business as such. 

24. In addition, from January 14, 2022 to June 29, 2022, a CIR division head who 
was also an employee of CIRA exchanged numerous off-channel messages with at least four CIR 
and CIRA colleagues.  These messages related to the broker-dealer’s business as such.   

25. As another example, from January 25, 2022 to March 30, 2022, a CIR vice 
president exchanged numerous off-channel messages with at least three CIR colleagues and at 
least one external contact in the securities industry.  These messages related to the 
broker-dealer’s business as such. 

26. From at least January 2019, CIRA personnel sent and received off-channel 
messages related to, among other things, providing and recommending investment advice to 
clients. 

27. For example, in June 2022, a CIRA vice president exchanged off-channel messages 
with a CIRA colleague related to, among other things, investment advice provided to clients. 

Cambridge’s Failure to Preserve Required Records Potentially 
Compromised and Delayed Commission Matters 

28. Between January 2019 and the present, Cambridge 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, Cambridge 
likely deprived the Commission of these off-channel communications in various investigations. 



 
 

6 

Cambridge’s Violations and Failure to Supervise 

29. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, CIR willfully2 violated Section 17(a) of the Exchange Act and Rule 
17a-4(b)(4) thereunder, which require broker-dealers to preserve for at least three years originals 
of all communications received and copies of all communications sent relating to its business as 
such.   

30. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, CIRA willfully violated Section 204 of the Advisers Act and Rule 204-2(a)(7) 
thereunder, which require investment advisers to preserve in an easily accessible place originals of 
all written communications received and copies of all written communications sent relating to, 
among other things, any recommendation made or proposed to be made and any advice given or 
proposed to be given. 

31. As a result of the conduct described above, CIR failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its 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.  

32. As a result of the conduct described above, CIRA failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its 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. 

Cambridge’s Remedial Efforts 

33. In determining to accept the Offers, the Commission considered steps promptly 
undertaken by Cambridge prior to and after being approached by Commission staff, including 
rolling out an on-channel texting application to Cambridge employees in October 2019, and 
cooperation afforded the Commission staff. 

Undertakings 

34. Prior to this action, Cambridge enhanced their policies and procedures, and 
increased training concerning the use of approved communications methods, including on 

 
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 

personal devices, and began implementing significant changes to the technology available to 
employees.  In addition, Respondents have undertaken to: 

35. Independent Compliance Consultant. 

a.  CIR and CIRA 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 Cambridge. 

 
b.  Cambridge will oversee the work of the Compliance Consultant. 
 
c.  Cambridge 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.  Cambridge shall require that, within ninety (90) days of the date of the 
engagement letter, the Compliance Consultant conduct: 

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

other policies and procedures designed to ensure that Cambridge’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 Cambridge 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 Cambridge 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 

Cambridge 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 Cambridge has 

begun implementing to meet the record retention requirements of the federal 
securities laws, including an assessment of the likelihood that Cambridge 
personnel will use the technological solutions going forward and a review of the 
measures employed by Cambridge to track employee usage of new technological 
solutions.  

 
v.  An assessment of the measures used by Cambridge 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 



 
 

8 

Cambridge’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 Cambridge’s electronic communications surveillance 

routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into 
Cambridge’s overall communications surveillance program.   

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

address instances of non-compliance by Cambridge employees with Cambridge’s 
policies and procedures concerning the use of Personal Devices to communicate 
about Cambridge business in the past.  This review shall include a survey of how 
Cambridge determined which employees failed to comply with Cambridge 
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.  Cambridge 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 CIR and CIRA 
and to the Commission staff (the “Report”).  Cambridge 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 Cambridge’s policies and 
procedures, and a summary of the plan for implementing the recommended changes in or 
improvements to Cambridge’s policies and procedures. 

 
e.  Cambridge 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, Cambridge shall advise the Compliance Consultant and 
the Commission staff in writing of any recommendations that Cambridge considers to be 
unduly burdensome, impractical, or inappropriate.  With respect to any recommendation 
that Cambridge considers unduly burdensome, impractical, or inappropriate, Cambridge 
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 Cambridge’s policies or procedures on 

which Cambridge and the Compliance Consultant do not agree, Cambridge 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 Cambridge and the Compliance Consultant, Cambridge 
shall require that the Compliance Consultant inform Cambridge and the Commission 
staff in writing of the Compliance Consultant’s final determination concerning any 



 
 

9 

recommendation that Cambridge considers to be unduly burdensome, impractical, or 
inappropriate.  Cambridge shall abide by the determinations of the Compliance 
Consultant and, within sixty (60) days after final agreement between Cambridge and the 
Compliance Consultant or final determination by the Compliance Consultant, whichever 
occurs first, Cambridge shall adopt and implement all of the recommendations that the 
Compliance Consultant deems appropriate. 

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

provide the Compliance Consultant with access to such of Cambridge’s files, books, 
records, and personnel as are reasonably requested by the Compliance Consultant for 
review. 

 
h. Cambridge 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.  Cambridge 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, Cambridge 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. 

 
36. One-Year Evaluation.  CIR and CIRA shall each require the Compliance 

Consultant to assess Cambridge’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 35.d above.  Cambridge 
shall require this review to evaluate Cambridge’s progress in the areas described in Paragraph 
35.c.i-vii above.  After this review, Cambridge shall require the Compliance Consultant to 
submit a report (the “One Year Report”) to each of CIR and CIRA and the Commission staff and 
shall ensure that the One Year Report includes an updated assessment of Cambridge’s policies 



 
 

10 

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.  

37. Reporting Discipline Imposed.  For two years following the entry of this Order, 
Cambridge shall notify the Commission staff as follows upon the imposition of any discipline 
imposed by Cambridge, 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 Cambridge’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.   

38. Internal Audit.  In addition to the Compliance Consultant’s review and issuance of 
the One Year Report, CIR and CIRA will each also have their respective Internal Audit function 
conduct a separate audit(s) to assess Cambridge’s progress in the areas described in Paragraph 
35.c.i-vii above.  After completion of this audit(s), Cambridge shall ensure that Internal Audit 
submits a report to CIR and CIRA and to the Commission staff. 

39. Recordkeeping.  CIR 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.  CIRA shall preserve any record of compliance 
with these undertakings in an easily accessible place for a period of not less than five (5) years 
from the end of the fiscal year during which the entry was made on such record, the first two (2) 
years in an appropriate office of CIRA. 

40. 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. 

41. Certification.  CIR and CIRA 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. 
 



 
 

11 

 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act as to CIR and 
Sections 203(e) and 203(k) of the Advisers Act as to CIRA, it is hereby ORDERED that: 
 

A. CIR 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. CIRA 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 34 to 

41 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 $10,000,000 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  
 
(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 

CIR and CIRA 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.   
 
  



 
 

12 

 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
	In the Matter of
	Respondents.
	I.
	II.
	III.
	Summary
	Respondents
	Recordkeeping Requirements under the Exchange and Advisers Acts
	Cambridge’s Policies and Procedures
	Cambridge’s Recordkeeping Failures Across Their Businesses
	Cambridge’s Failure to Preserve Required Records Potentially Compromised and Delayed Commission Matters
	Cambridge’s Violations and Failure to Supervise
	Cambridge’s Remedial Efforts
	Undertakings

	IV.