CFTC Orders Piper Sandler to Pay $2 Million for Recordkeeping and Supervision Failures for Firm-Wide Use of Unapproved Communication Methods

Washington, D.C.- The Commodity Futures Trading Commission today issued an order simultaneously filing and settling charges against Piper Sandler Hedging Services LLC, an introducing broker, for failing to maintain and preserve records that were required to be kept under CFTC recordkeeping requirements, and failing to diligently supervise matters related to its business as a CFTC registrant.

The order requires Piper Sander to pay a $2 million civil monetary penalty; to cease and desist from further violations of recordkeeping and supervision requirements; and to engage in specified remedial undertakings. Piper Sandler admits the facts detailed in the order.

Cases Background

The order finds that from at least 2019 to the present, Piper Sandler employees, including those at senior levels, communicated using unapproved communication methods, including messages sent via personal text. The firm was required to keep certain of these written communications because they related to the firm's business as a CFTC registrant. These written communications generallywere not maintained and preserved by Piper Sandler, and the firm generally would not have been able to provide them promptly to the CFTC if and when requested.

The order further finds the use of unapproved communication methods violated Piper Sandler's internal policies and procedures, which broadly prohibited business-related communication taking place via unapproved methods. Further, some of the same supervisory personnel responsible for ensuring compliance with the firm's policies and procedures themselves used non-approved methods of communication to engage in business-related communications, in violation of firm policy.

Since December 2021, the CFTC has imposed $1.207 billion in civil monetary penalties on 26 financial institutions for their use of unapproved methods of communication, in violation of CFTC recordkeeping and supervision requirements. [See CFTC Press Release Nos. 8470-21; 8599-22; 8699-23; 8701-23; 8762-23; 8763-23; 8794-23; 8880-24; 8943-24; 8945-24]

Related Civil Actions

The Securities and Exchange Commission recently announced entry of an order filing and settling charges against a Piper Sandler affiliate and imposing a civil monetary penalty for recordkeeping and supervision violations related to the use of unapproved methods of communication.

******

The Division of Enforcement staff responsible for these actions are Devin Cain; Alejandra de Urioste; R. Stephen Painter, Jr.; Lenel Hickson, Jr.; and Manal M. Sultan.