Houston-based Tudor, Pickering, Holt and its owner, New York-based Perella Weinberg Partners, have agreed to pay a $2.5 million fine for violating federal securities laws’ recordkeeping provisions, according to an administrative order filed Friday by the U.S. Securities and Exchange Commission.
The allegations against the Texas-headquartered boutique energy banker and its parent were announced in a blitz of charges filed Friday by the SEC as the federal government comes to the end of its fiscal year and as the agency and the government face a potential shutdown.
In all, the SEC brought cases against six different financial institutions and their affiliates — including Interactive Brokers Corp., Robert W. Baird & Co., Nuveen Securities and Fifth Third Securities Inc. — alleging violations of securities laws requiring the maintenance and preservation of electronic communications.
In a press release, SEC officials noted that the other investment banking firms paid fines ranging from $8 million to $35 million, but that Perella Weinberg and Tudor, Pickering, Holt paid only $2.5 million because officials at the companies self-reported their errors to the federal enforcement agency.
“These proceedings arise out of Perella’s identification — and self-report — of widespread and longstanding failures of certain Perella employees throughout the firms, including at senior levels, to adhere to certain of these essential requirements and Perella’s own policies. Using their personal devices, these employees communicated both internally and externally by personal text messages or WhatsApp (‘off-channel communications),” according to the 12-page SEC order.
“From January 2018, Perella Weinberg and Tudor, Pickering, Holt employees sent and received off-channel communications that related to the businesses of these broker-dealers and PWPCM employees sent and received off-channel communications related to recommendations made or proposed to be made and advice given or proposed to be given,” the SEC states. “Respondents did not maintain or preserve the substantial majority of these written communications. Respondents’ failure was firm-wide, and involved employees at various levels of authority. As a result, PWP and TPH violated Section 17(a) of the Exchange Act.”
The SEC order states that the compliance staff at both firms “identified business-related electronic communications on non-approved platforms” and then “conducted an internal investigation and self-reported the facts to commission staff.”
Perella Weinberg purchased Tudor, Pickering, Holt in 2016.
The SEC’s investigation into Perella Weinberg and Tudor, Pickering, Holt was conducted by SEC officials in its New York office, including Laurel S. Fensterstock, Karolina Klyuchnikova, Austin Thompson and Alison R. Levine, and they were supervised by Thomas P. Smith Jr.
Perella Weinberg and Tudor, Pickering, Holt were represented by Skadden, Arps, Slate, Meagher & Flom partners Daniel Michael and Anita Bandy, and associates Katherine Giordano and Andrew Hanson. Bandy also represented San Antonio-based Clear Channel Outdoor in its $26 million settlement Thursday with the SEC over violations of the Foreign Corrupt Practices Act.