In re The Huntington Investment

 
 
UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 99504 / February 9, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6552 / February 9, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21853 
 
 
In the Matter of 
 
The Huntington Investment 
Company,  
Huntington Securities, Inc., and 
Capstone Capital Markets LLC, 
 
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 The Huntington Investment Company (“HIC”), Huntington Securities, 
Inc. (“HSI”), and Capstone Capital Markets LLC (“Capstone”) (collectively, “Respondents” or 
“Huntington”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against HIC. 
 
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. These 
proceedings arise out of Huntington’s identification—and self-report—of widespread failures of 
certain Huntington employees throughout the firms, including at senior levels, to adhere to 
certain of these essential requirements and Huntington’s own policies. Using their personal 
devices, these employees communicated both internally and externally by personal text messages 
(“off-channel communications”). 
2. After Huntington’s compliance staff identified business-related electronic 
communications on a non-approved platform on personal devices, Huntington conducted an 
internal investigation and self-reported the facts to Commission staff.  Respondents proactively 
identified key documents and facts, which assisted the Commission staff in efficiently 
investigating the conduct. Prior to contacting the Division of Enforcement, since January 2019, 
Respondents also undertook significant remedial measures relating to their recordkeeping 
practices, policies and procedures, and related supervisory practices, including, in 2021, making 
an on-channel texting application available. 
3. From at least January 2019, Huntington employees sent and received off-channel 
communications that related to HIC’s, HSI’s and Capstone’s broker-dealer businesses and with 
respect to HIC’s investment advisory business, off-channel communications 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, Respondents violated Section 17(a) of the Exchange Act and 
Rule 17a-4(b)(4) thereunder and HIC violated Section 204 of the Advisers Act and Rule 204-
2(a)(7) thereunder. 
4. Huntington’s supervisors, who were responsible for supervising junior employees, 
routinely communicated on a non-approved platform using their personal devices.  In fact, senior 
managers and officers responsible for supervising junior employees themselves failed to comply 
with HIC’s, HSI’s, and Capstone’s policies by communicating using non-HIC, HSI, and 
Capstone approved methods on their personal devices about HIC, HSI and Capstone’s broker-
dealers   and HIC’s investment adviser business.  
 
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.  

 
 
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5. HIC’s, HSI’s, and Capstone’s widespread failure to implement their policies and 
procedures that prohibit such communications led to their failure reasonably to supervise their 
employees within the meaning of Section 15(b)(4)(E) of the Exchange Act as to each of the 
Respondents, as well as Section 203(e)(6) of the Advisers Act as to HIC.  
6. During the time period that HIC failed to maintain and preserve off-channel 
communications that its employees sent and received related to the broker-dealer business and 
investment adviser business, HIC received and responded to a Commission records request in a  
Commission investigation.  As a result, HIC’s recordkeeping failures likely impacted the 
Commission’s ability to carry out its regulatory functions and investigate violations of the 
federal securities laws in that investigation.   
7. After Huntington initiated a review of its recordkeeping efforts, HIC, HSI, and 
Capstone identified failures and self-reported their conduct, and further enhanced their ongoing 
programs of remediation. As set forth in the Undertakings below, HIC, HSI and Capstone will 
retain an independent compliance consultant to review and assess HIC’s, HSI’s and Capstone’s 
remedial steps relating to HIC’s HSI’s and Capstone’s recordkeeping practices, policies and 
procedures, related supervisory practices, and employment actions. 
Respondents 
8. The Huntington Investment Company is an Ohio corporation with its principal 
office in Columbus, Ohio, and is registered with the Commission as a broker-dealer and 
investment adviser. It is a wholly owned subsidiary of Huntington Bancshares Incorporated, a 
publicly held regional bank holding company incorporated in Ohio. 
9. Huntington Securities, Inc. is  a Delaware corporation with its principal office in 
Columbus, Ohio, and is registered with the Commission as a broker-dealer and municipal advisor. 
It is also a wholly owned subsidiary of Huntington Bancshares Incorporated. 
10. Capstone Capital Markets LLC is a Delaware limited liability company with its 
principal office in Boston, Massachusetts, and is registered with the Commission as a 
broker-dealer. Capstone was acquired by Huntington Bancshares Incorporated in June 2022 as a 
wholly owned subsidiary.   
Recordkeeping Requirements under the Exchange and Advisers Acts 
11. 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. 
12. 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 

 
 
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produced by broker-dealers or investment advisers, must be maintained and produced promptly 
to Commission representatives.   
13. 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 a 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.  
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, among other 
things, any recommendation made or proposed to be made and any advice given or proposed to be 
given. 
15. 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). 
HIC’s, HSI’s, and Capstone’s Policies and Procedures 
16. HIC, HSI, and Capstone maintained certain policies and procedures designed to 
ensure the retention of business-related records, including electronic communications, in 
compliance with the relevant recordkeeping provisions.   
17. HIC, HSI, and Capstone 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. After 2021, Huntington 
employees were advised that they were required to use an approved platform for business related 
communications on any personal device.  
18. Messages sent through HIC, HSI, and Capstone -approved communications 
methods were monitored, subject to review, and, when appropriate, archived.  Messages sent 
through unapproved communications methods, such as text messaging or, after 2021, 
unapproved applications on personal devices, were not monitored, subject to review or archived. 
19. HIC’s, HSI’s, and Capstone’s policies were designed to address supervisors’ 
supervision of employees’ training in HIC’s, HSI’s, and Capstone’s communications policies 
and adherence to HIC’s, HSI’s, and Capstone’s books and recordkeeping requirements.  
Supervisory policies notified employees that electronic communications were subject to 
surveillance by HIC, HSI, and Capstone.  HIC, HSI, and Capstone had procedures for all 
employees, including supervisors, requiring annual self-attestations of compliance.  

 
 
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20. HIC, HSI, and Capstone, however, failed to implement a system of follow-up and 
review to determine that supervisors were reasonably following HIC’s, HSI’s, and Capstone’s 
policies.  While permitting employees to use approved communications methods, including, after 
2021, an approved platform on personal phones, for business communications, HIC, HSI, and 
Capstone failed to implement sufficient monitoring to assure that their recordkeeping and 
communications policies were being followed.  
Respondents’ Recordkeeping Failures Across Their Businesses 
21. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  In September 2023, Huntington voluntarily contacted the staff 
regarding certain off-channel communications that it had identified related to the businesses of 
HIC, HSI, and Capstone. Huntington cooperated with the staff’s investigation by proactively 
gathering communications from the personal devices of its personnel and responding to the staff’s 
requests for additional information. As reported to the Commission staff, Huntington personnel 
who had engaged in the use of off-channel communications included senior managers and officers 
across each firm. 
22. Huntington alerted the Commission staff to numerous off-channel 
communications at various seniority levels of Huntington’s broker-dealers.  In addition, HIC’s 
investigation uncovered the use of off-channel communications within HIC’s investment adviser 
business.  Respondents collected data from a sampling of broker-dealer and investment adviser 
personnel and found that some had engaged in at least some level of off-channel communications 
since January 2019.  Overall, these personnel sent and received numerous off-channel 
communications, involving other Huntington personnel and external contacts in the securities 
industry.  As disclosed to the Commission staff, within Huntington, a number of senior leaders 
participated in off-channel communications. 
23. From at least January 2019, HIC, HSI, and Capstone personnel sent and received 
off-channel messages that concerned the businesses of the broker-dealers.  During this period, 
HIC investment adviser personnel sent and received off-channel messages related to, among 
other things, providing and recommending investment advice to clients. 
24. For example, from January 2019 to March 2023, a HIC director exchanged 
off-channel messages on at least 68 occasions, including with junior employees under their 
supervision.  These messages related to the HIC’s broker-dealer business as such. 
25. In another example, in 2022, a HIC officer communicated via text message with a 
HIC regional manager.  These messages related to, among other things, investment advice given 
or proposed to be given to investment advisory clients.  
 
26. In an additional example, in August 2021 HSI employees exchanged numerous 
off-channel messages with each other.  These messages related to HSI’s broker-dealer business 
as such.  
 

 
 
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27.  In a final example, in September 2021 and October 2021, a Capstone employee 
exchanged off-channel messages with a Capstone customer.  These messages related to 
Capstone’s broker-dealer business as such. 
 
HIC’s   Failure to Preserve Required Records Potentially 
Compromised and Delayed a Commission Matter 
28. Between January 2019 and the present, HIC received and responded to a 
Commission records request in a Commission investigation.  By failing to maintain and preserve 
required records relating to its business, HIC likely deprived the Commission of off-channel 
communications in that investigation. 
Respondents’    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, HIC, HSI, and Capstone 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 their 
business as such.   
30. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, HIC 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 r eceived 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, HIC, HSI, and Capstone 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.  
32. As a result of the conduct described above, HIC failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its employees’ aiding and abetting 
 
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). 

 
 
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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. 
HIC’s, HSI’s, and Capstone’s Remedial and Cooperation Efforts 
33. In determining to accept the Offers, the Commission considered HIC’s, HSI’s, and 
Capstone’s self-report, cooperation afforded to Commission staff, and remediation. After 
identifying off-channel communications, Respondents conducted an internal investigation and self-
reported the facts to Commission staff. Prior to approaching Commission staff, since at least 
January 2019, HIC, HSI, and Capstone had begun a program of remediation, which included 
strengthening their policies and procedures by making investments in new technologies to improve 
surveillance and retention efforts; increasing the number of trainings and sending firm-wide 
reminders that emphasized the importance of complying with recordkeeping obligations, and, in 
2021, making an on-channel texting platform available. HIC, HSI, and Capstone also took 
proactive steps to collect and preserve off-channel communications. 
Undertakings 
34. Prior to this action, HIC, HSI, and Capstone 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, HIC, HSI, and Capstone have undertaken to: 
35. Independent Compliance Consultant. 
a.  HIC, HSI, and Capstone 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 HIC, HSI, and 
Capstone. 
 
b.  HIC, HSI, and Capstone will oversee the work of the Compliance Consultant. 
 
c.  HIC, HSI, and Capstone 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.  HIC, HSI, and Capstone shall require that, within 
ninety (90) days of the date of the engagement letter, the Compliance Consultant conduct: 
 
i.  A comprehensive review of HIC’s, HSI’s, and Capstone’s supervisory, 
compliance, and other policies and procedures designed to ensure that HIC’s, 
HSI’s, and Capstone’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. 
 

 
 
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ii.  A comprehensive review of training conducted by HIC, HSI, and 
Capstone 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 HIC, HSI, and Capstone 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 
HIC, HSI, and Capstone 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 HIC, HSI, and 
Capstone have begun implementing to meet the record retention requirements of 
the federal securities laws, including an assessment of the likelihood that HIC, 
HSI, and Capstone personnel will use the technological solutions going forward 
and a review of the measures employed by HIC, HSI, and Capstone to track 
employee usage of new technological solutions.  
 
v.  An assessment of the measures used by HIC, HSI, and Capstone 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 HIC’s, HSI’s, and Capstone’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 HIC’s, HSI’s, and Capstone’s electronic communications 
surveillance routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into HIC’s, 
HSI’s, and Capstone’s overall communications surveillance program.   
 
vii.  A comprehensive review of the framework adopted by HIC, HSI, and 
Capstone to address instances of non-compliance by HIC, HSI, and Capstone 
employees with HIC’s, HSI’s, and Capstone’s policies and procedures concerning 
the use of Personal Devices to communicate about HIC, HSI, and Capstone 
business in the past.  This review shall include a survey of how HIC, HSI, and 
Capstone determined which employees failed to comply with HIC’s, HSI’s, and 
Capstone’s 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.  HIC, HSI, and Capstone shall require that, within forty-five (45) days after 
completion of the review set forth in sub-paragraphs 35.c.i. through c.vii. above, the 
Compliance Consultant shall submit a detailed written report of its findings to HIC, HSI, 

 
 
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and Capstone, and to the Commission staff (the “Report”).  HIC, HSI, and Capstone 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 HIC’s, HSI’s, and 
Capstone’s policies and procedures, and a summary of the plan for implementing the 
recommended changes in or improvements to HIC’s, HSI’s, and Capstone’s policies and 
procedures. 
 
e.  HIC, HSI, and Capstone 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, HIC, HSI, and Capstone shall advise the 
Compliance Consultant and the Commission staff in writing of any recommendations that 
HIC, HSI, and/or Capstone considers to be unduly burdensome, impractical, or 
inappropriate.  With respect to any recommendation that HIC, HSI, and/or Capstone 
considers unduly burdensome, impractical, or inappropriate, HIC, HSI, and/or Capstone 
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 HIC’s, HSI’s, and Capstone’s policies 
or procedures on which HIC, HSI, and Capstone and the Compliance Consultant do not 
agree, HIC, HSI, and Capstone 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 HIC, HSI, and 
Capstone and the Compliance Consultant, HIC, HSI, and Capstone shall require that the 
Compliance Consultant inform HIC, HSI, and Capstone and the Commission staff in 
writing of the Compliance Consultant’s final determination concerning any 
recommendation that HIC, HSI, and/or Capstone consider to be unduly burdensome, 
impractical, or inappropriate.  HIC, HSI, and Capstone shall abide by the determinations 
of the Compliance Consultant and, within sixty (60) days after final agreement between 
HIC, HSI, and Capstone and the Compliance Consultant or final determination by the 
Compliance Consultant, whichever occurs first, HIC, HSI, and Capstone shall adopt and 
implement all of the recommendations that the Compliance Consultant deems 
appropriate. 
 
g.  HIC, HSI, and Capstone shall cooperate fully with the Compliance Consultant 
and shall provide the Compliance Consultant with access to such of HIC’s, HSI’s, and 
Capstone’s files, books, records, and personnel as are reasonably requested by the 
Compliance Consultant for review. 
 
h. HIC, HSI, and Capstone 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.  
HIC, HSI, and Capstone shall compensate the Compliance Consultant and persons 
engaged to assist the Compliance Consultant for services rendered under this Order at 
their reasonable and customary rates. 

 
 
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i.  For the period of engagement and for a period of two years from completion of 
the engagement, HIC, HSI, and Capstone 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. HIC, HSI, and Capstone shall each require the Compliance 
Consultant to assess HIC’s, HSI’s, and Capstone’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.  HIC, HSI, and Capstone shall require this review to evaluate HIC’s, HSI’s, and 
Capstone’s progress in the areas described in Paragraph 35.c.i through 35.c.vii above.  After this 
review, Huntington shall require the Compliance Consultant to submit a report (the “One Year 
Report”) to each of HIC, HSI, and Capstone, and the Commission staff and shall ensure that the 
One Year Report includes an updated assessment of HIC’s, HSI’s, and Capstone’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.  
37. R
eporting Discipline Imposed.  For two years following the entry of this Order, 
HIC, HSI, and Capstone shall notify the Commission staff as follows upon the imposition of any 
discipline imposed by HIC, HSI, and Capstone, 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 HIC’s, HSI’s, and Capstone’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, HIC, HSI, and Capstone will each also have its respective Internal Audit 
function conduct a separate audit(s) to assess HIC’s, HSI’s, and Capstone’s progress in the areas 

 
 
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described in Paragraph 35.c.i through 35.c.vii above.  After completion of this audit(s), HIC, HSI, 
and Capstone shall ensure that Internal Audit submits a report to each of HIC, HSI, and Capstone, 
and to the Commission staff. 
39. Recordkeeping.  HIC, HSI, and Capstone 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.  HIC shall also 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 HIC.  
 
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. C
ertification.  HIC, HSI, and Capstone 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 Amy S. Cotter, Assistant Regional Director, Division of 
Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 1450, Chicago, Illinois 
60604, or such other person as the Commission staff may request, with a copy to the Office of 
Chief Counsel of the Enforcement Division, no later than sixty (60) days from the date of the 
completion of the undertakings. 
IV. 
 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondents’ Offers. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act as to HIC, HSI and 
Capstone and Sections 203(e) and 203(k) of the Advisers Act as to HIC, it is hereby ORDERED 
that: 
 
A. HIC, HSI, and Capstone 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. HIC 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. 

 
 
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E. Respondents shall, jointly and severally, within 14 days of the entry of this Order, 
pay a civil money penalty in the amount of $1,250,000 to the Securities and 
Exchange Commission for transfer to the general fund of the United States 
Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not 
made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   
 
 Payment must be made in one of the following ways:   
 
(1) 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 
HIC, HSI and Capstone as 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 Amy S. Cotter, 
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  
 

 
 
13 
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. 99504 / February 9, 2024 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6552 / February 9, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21853 
 
 
In the Matter of 
 

The Huntington Investment 
Company,  
Huntington Securities, Inc., and 
Capstone Capital Markets LLC, 

 
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 The Huntington Investment Company (“HIC”), Huntington Securities, 
Inc. (“HSI”), and Capstone Capital Markets LLC (“Capstone”) (collectively, “Respondents” or 
“Huntington”) and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 
(“Advisers Act”) against HIC. 

 
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 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. These 
proceedings arise out of Huntington’s identification—and self-report—of widespread failures of 
certain Huntington employees throughout the firms, including at senior levels, to adhere to 
certain of these essential requirements and Huntington’s own policies. Using their personal 
devices, these employees communicated both internally and externally by personal text messages 
(“off-channel communications”). 

2. After Huntington’s compliance staff identified business-related electronic 
communications on a non-approved platform on personal devices, Huntington conducted an 
internal investigation and self-reported the facts to Commission staff.  Respondents proactively 
identified key documents and facts, which assisted the Commission staff in efficiently 
investigating the conduct. Prior to contacting the Division of Enforcement, since January 2019, 
Respondents also undertook significant remedial measures relating to their recordkeeping 
practices, policies and procedures, and related supervisory practices, including, in 2021, making 
an on-channel texting application available. 

3. From at least January 2019, Huntington employees sent and received off-channel 
communications that related to HIC’s, HSI’s and Capstone’s broker-dealer businesses and with 
respect to HIC’s investment advisory business, off-channel communications 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, Respondents violated Section 17(a) of the Exchange Act and 
Rule 17a-4(b)(4) thereunder and HIC violated Section 204 of the Advisers Act and Rule 204-
2(a)(7) thereunder. 

4. Huntington’s supervisors, who were responsible for supervising junior employees, 
routinely communicated on a non-approved platform using their personal devices.  In fact, senior 
managers and officers responsible for supervising junior employees themselves failed to comply 
with HIC’s, HSI’s, and Capstone’s policies by communicating using non-HIC, HSI, and 
Capstone approved methods on their personal devices about HIC, HSI and Capstone’s broker-
dealers and HIC’s investment adviser business.  

 
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 

5. HIC’s, HSI’s, and Capstone’s widespread failure to implement their policies and 
procedures that prohibit such communications led to their failure reasonably to supervise their 
employees within the meaning of Section 15(b)(4)(E) of the Exchange Act as to each of the 
Respondents, as well as Section 203(e)(6) of the Advisers Act as to HIC.  

6. During the time period that HIC failed to maintain and preserve off-channel 
communications that its employees sent and received related to the broker-dealer business and 
investment adviser business, HIC received and responded to a Commission records request in a  
Commission investigation.  As a result, HIC’s recordkeeping failures likely impacted the 
Commission’s ability to carry out its regulatory functions and investigate violations of the 
federal securities laws in that investigation.   

7. After Huntington initiated a review of its recordkeeping efforts, HIC, HSI, and 
Capstone identified failures and self-reported their conduct, and further enhanced their ongoing 
programs of remediation. As set forth in the Undertakings below, HIC, HSI and Capstone will 
retain an independent compliance consultant to review and assess HIC’s, HSI’s and Capstone’s 
remedial steps relating to HIC’s HSI’s and Capstone’s recordkeeping practices, policies and 
procedures, related supervisory practices, and employment actions. 

Respondents 

8. The Huntington Investment Company is an Ohio corporation with its principal 
office in Columbus, Ohio, and is registered with the Commission as a broker-dealer and 
investment adviser. It is a wholly owned subsidiary of Huntington Bancshares Incorporated, a 
publicly held regional bank holding company incorporated in Ohio. 

9. Huntington Securities, Inc. is a Delaware corporation with its principal office in 
Columbus, Ohio, and is registered with the Commission as a broker-dealer and municipal advisor. 
It is also a wholly owned subsidiary of Huntington Bancshares Incorporated. 

10. Capstone Capital Markets LLC is a Delaware limited liability company with its 
principal office in Boston, Massachusetts, and is registered with the Commission as a 
broker-dealer. Capstone was acquired by Huntington Bancshares Incorporated in June 2022 as a 
wholly owned subsidiary.   

Recordkeeping Requirements under the Exchange and Advisers Acts 

11. 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. 

12. 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 



 
 

4 

produced by broker-dealers or investment advisers, must be maintained and produced promptly 
to Commission representatives.   

13. 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 a 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.  

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

15. 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). 

HIC’s, HSI’s, and Capstone’s Policies and Procedures 

16. HIC, HSI, and Capstone maintained certain policies and procedures designed to 
ensure the retention of business-related records, including electronic communications, in 
compliance with the relevant recordkeeping provisions.   

17. HIC, HSI, and Capstone 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. After 2021, Huntington 
employees were advised that they were required to use an approved platform for business related 
communications on any personal device.  

18. Messages sent through HIC, HSI, and Capstone -approved communications 
methods were monitored, subject to review, and, when appropriate, archived.  Messages sent 
through unapproved communications methods, such as text messaging or, after 2021, 
unapproved applications on personal devices, were not monitored, subject to review or archived. 

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



 
 

5 

20. HIC, HSI, and Capstone, however, failed to implement a system of follow-up and 
review to determine that supervisors were reasonably following HIC’s, HSI’s, and Capstone’s 
policies.  While permitting employees to use approved communications methods, including, after 
2021, an approved platform on personal phones, for business communications, HIC, HSI, and 
Capstone failed to implement sufficient monitoring to assure that their recordkeeping and 
communications policies were being followed.  

Respondents’ Recordkeeping Failures Across Their Businesses 

21. In September 2021, the Commission staff commenced a risk-based initiative to 
investigate whether broker-dealers were properly retaining business-related messages sent and 
received on personal devices.  In September 2023, Huntington voluntarily contacted the staff 
regarding certain off-channel communications that it had identified related to the businesses of 
HIC, HSI, and Capstone. Huntington cooperated with the staff’s investigation by proactively 
gathering communications from the personal devices of its personnel and responding to the staff’s 
requests for additional information. As reported to the Commission staff, Huntington personnel 
who had engaged in the use of off-channel communications included senior managers and officers 
across each firm. 

22. Huntington alerted the Commission staff to numerous off-channel 
communications at various seniority levels of Huntington’s broker-dealers.  In addition, HIC’s 
investigation uncovered the use of off-channel communications within HIC’s investment adviser 
business.  Respondents collected data from a sampling of broker-dealer and investment adviser 
personnel and found that some had engaged in at least some level of off-channel communications 
since January 2019.  Overall, these personnel sent and received numerous off-channel 
communications, involving other Huntington personnel and external contacts in the securities 
industry.  As disclosed to the Commission staff, within Huntington, a number of senior leaders 
participated in off-channel communications. 

23. From at least January 2019, HIC, HSI, and Capstone personnel sent and received 
off-channel messages that concerned the businesses of the broker-dealers.  During this period, 
HIC investment adviser personnel sent and received off-channel messages related to, among 
other things, providing and recommending investment advice to clients. 

24. For example, from January 2019 to March 2023, a HIC director exchanged 
off-channel messages on at least 68 occasions, including with junior employees under their 
supervision.  These messages related to the HIC’s broker-dealer business as such. 

25. In another example, in 2022, a HIC officer communicated via text message with a 
HIC regional manager.  These messages related to, among other things, investment advice given 
or proposed to be given to investment advisory clients.  

 
26. In an additional example, in August 2021 HSI employees exchanged numerous 

off-channel messages with each other.  These messages related to HSI’s broker-dealer business 
as such.  

 



 
 

6 

27.  In a final example, in September 2021 and October 2021, a Capstone employee 
exchanged off-channel messages with a Capstone customer.  These messages related to 
Capstone’s broker-dealer business as such. 
 

HIC’s Failure to Preserve Required Records Potentially 
Compromised and Delayed a Commission Matter 

28. Between January 2019 and the present, HIC received and responded to a 
Commission records request in a Commission investigation.  By failing to maintain and preserve 
required records relating to its business, HIC likely deprived the Commission of off-channel 
communications in that investigation. 

Respondents’ 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, HIC, HSI, and Capstone 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 their 
business as such.   

30. As a result of the conduct described above, from at least January 2019 through the 
date of this Order, HIC 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, HIC, HSI, and Capstone 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.  

32. As a result of the conduct described above, HIC failed reasonably to supervise its 
employees with a view to preventing or detecting certain of its employees’ aiding and abetting 

 
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 

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. 

HIC’s, HSI’s, and Capstone’s Remedial and Cooperation Efforts 

33. In determining to accept the Offers, the Commission considered HIC’s, HSI’s, and 
Capstone’s self-report, cooperation afforded to Commission staff, and remediation. After 
identifying off-channel communications, Respondents conducted an internal investigation and self-
reported the facts to Commission staff. Prior to approaching Commission staff, since at least 
January 2019, HIC, HSI, and Capstone had begun a program of remediation, which included 
strengthening their policies and procedures by making investments in new technologies to improve 
surveillance and retention efforts; increasing the number of trainings and sending firm-wide 
reminders that emphasized the importance of complying with recordkeeping obligations, and, in 
2021, making an on-channel texting platform available. HIC, HSI, and Capstone also took 
proactive steps to collect and preserve off-channel communications. 

Undertakings 

34. Prior to this action, HIC, HSI, and Capstone 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, HIC, HSI, and Capstone have undertaken to: 

35. Independent Compliance Consultant. 

a.  HIC, HSI, and Capstone 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 HIC, HSI, and 
Capstone. 

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

 
i.  A comprehensive review of HIC’s, HSI’s, and Capstone’s supervisory, 

compliance, and other policies and procedures designed to ensure that HIC’s, 
HSI’s, and Capstone’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. 

 



 
 

8 

ii.  A comprehensive review of training conducted by HIC, HSI, and 
Capstone 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 HIC, HSI, and Capstone 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 

HIC, HSI, and Capstone 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 HIC, HSI, and 

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

 
v.  An assessment of the measures used by HIC, HSI, and Capstone 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 HIC’s, HSI’s, and Capstone’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 HIC’s, HSI’s, and Capstone’s electronic communications 

surveillance routines to ensure that electronic communications through approved 
communications methods found on Personal Devices are incorporated into HIC’s, 
HSI’s, and Capstone’s overall communications surveillance program.   

 
vii.  A comprehensive review of the framework adopted by HIC, HSI, and 

Capstone to address instances of non-compliance by HIC, HSI, and Capstone 
employees with HIC’s, HSI’s, and Capstone’s policies and procedures concerning 
the use of Personal Devices to communicate about HIC, HSI, and Capstone 
business in the past.  This review shall include a survey of how HIC, HSI, and 
Capstone determined which employees failed to comply with HIC’s, HSI’s, and 
Capstone’s 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.  HIC, HSI, and Capstone shall require that, within forty-five (45) days after 

completion of the review set forth in sub-paragraphs 35.c.i. through c.vii. above, the 
Compliance Consultant shall submit a detailed written report of its findings to HIC, HSI, 



 
 

9 

and Capstone, and to the Commission staff (the “Report”).  HIC, HSI, and Capstone 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 HIC’s, HSI’s, and 
Capstone’s policies and procedures, and a summary of the plan for implementing the 
recommended changes in or improvements to HIC’s, HSI’s, and Capstone’s policies and 
procedures. 

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

or procedures on which HIC, HSI, and Capstone and the Compliance Consultant do not 
agree, HIC, HSI, and Capstone 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 HIC, HSI, and 
Capstone and the Compliance Consultant, HIC, HSI, and Capstone shall require that the 
Compliance Consultant inform HIC, HSI, and Capstone and the Commission staff in 
writing of the Compliance Consultant’s final determination concerning any 
recommendation that HIC, HSI, and/or Capstone consider to be unduly burdensome, 
impractical, or inappropriate.  HIC, HSI, and Capstone shall abide by the determinations 
of the Compliance Consultant and, within sixty (60) days after final agreement between 
HIC, HSI, and Capstone and the Compliance Consultant or final determination by the 
Compliance Consultant, whichever occurs first, HIC, HSI, and Capstone shall adopt and 
implement all of the recommendations that the Compliance Consultant deems 
appropriate. 

 
g.  HIC, HSI, and Capstone shall cooperate fully with the Compliance Consultant 

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

 
h. HIC, HSI, and Capstone 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.  
HIC, HSI, and Capstone 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. 



 
 

10 

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

the engagement, HIC, HSI, and Capstone 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. HIC, HSI, and Capstone shall each require the Compliance 

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

37. Reporting Discipline Imposed.  For two years following the entry of this Order, 
HIC, HSI, and Capstone shall notify the Commission staff as follows upon the imposition of any 
discipline imposed by HIC, HSI, and Capstone, 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 HIC’s, HSI’s, and Capstone’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, HIC, HSI, and Capstone will each also have its respective Internal Audit 
function conduct a separate audit(s) to assess HIC’s, HSI’s, and Capstone’s progress in the areas 



 
 

11 

described in Paragraph 35.c.i through 35.c.vii above.  After completion of this audit(s), HIC, HSI, 
and Capstone shall ensure that Internal Audit submits a report to each of HIC, HSI, and Capstone, 
and to the Commission staff. 

39. Recordkeeping.  HIC, HSI, and Capstone 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.  HIC shall also 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 HIC.  

 
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.  HIC, HSI, and Capstone 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 Amy S. Cotter, Assistant Regional Director, Division of 
Enforcement, Chicago Regional Office, 175 West Jackson Boulevard, Suite 1450, Chicago, Illinois 
60604, or such other person as the Commission staff may request, with a copy to the Office of 
Chief Counsel of the Enforcement Division, no later than sixty (60) days from the date of the 
completion of the undertakings. 

IV. 

 In view of the foregoing, the Commission deems it appropriate and in the public interest 
to impose the sanctions agreed to in Respondents’ Offers. 
 
 Accordingly, pursuant to Sections 15(b) and 21C of the Exchange Act as to HIC, HSI and 
Capstone and Sections 203(e) and 203(k) of the Advisers Act as to HIC, it is hereby ORDERED 
that: 
 

A. HIC, HSI, and Capstone 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. HIC 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. 



 
 

12 

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

pay a civil money penalty in the amount of $1,250,000 to the Securities and 
Exchange Commission for transfer to the general fund of the United States 
Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not 
made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.   

 
 Payment must be made in one of the following ways:   
 

(1) 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 

HIC, HSI and Capstone as 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 Amy S. Cotter, 
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  
 



 
 

13 

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
	HIC’s, HSI’s, and Capstone’s Policies and Procedures
	Respondents’ Recordkeeping Failures Across Their Businesses
	HIC’s Failure to Preserve Required Records Potentially Compromised and Delayed a Commission Matter
	Respondents’ Violations and Failure to Supervise
	HIC’s, HSI’s, and Capstone’s Remedial and Cooperation Efforts
	Undertakings

	IV.