UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 99505 / February 9, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-21854

In the Matter of

U.S. Bancorp Investments, 

Inc., 

Respondent.

ORDER INSTITUTING 

ADMINISTRATIVE AND CEASE-ANDDESIST PROCEEDINGS, PURSUANT TO 

SECTIONS 15(b) AND 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934,

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASEAND-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 U.S. Bancorp Investments, Inc. (“Respondent” or “USBI”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (“Offer”) that the Commission has determined to accept. Respondent admits the 

facts set forth in Section III below, acknowledges that its conduct violated the federal securities 

laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and 

consents 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, Making Findings, 

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

III.

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary

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

to ensure that they responsibly discharge their crucial role in our markets. The Commission has 

1

 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

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

employees throughout USBI, including at senior levels, to adhere to certain of these essential 

requirements and USBI’s 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 2020, USBI employees sent and received off-channel 

communications that related to the business of the broker-dealer operated by USBI. Respondent 

did not maintain or preserve the substantial majority of these written communications. 

Respondent’s failure was firm-wide and involved employees at various levels of authority. As a 

result, USBI violated Section 17(a) of the Exchange Act and Rule 17a-4(b)(4) thereunder. 

4. USBI’s supervisors, who were responsible for supervising junior employees, 

communicated off-channel using their personal devices. In fact, a senior executive, senior vice 

presidents, and managing directors responsible for supervising junior employees themselves 

failed to comply with USBI’s policies by communicating using non-USBI approved methods on 

their personal devices about USBI’s broker-dealer business.

5. USBI’s widespread failure to implement its policies and procedures that prohibit 

such communications led to its failure to reasonably supervise its employees within the meaning 

of Section 15(b)(4)(E) of the Exchange Act. 

6. During the time period that USBI failed to maintain and preserve off-channel 

communications its employees sent and received related to the broker-dealer’s business, USBI

received and responded to Commission subpoenas for documents and records requests in 

numerous Commission investigations. As a result, USBI’s recordkeeping failures likely 

impacted the Commission’s ability to carry out its regulatory functions and investigate violations 

of the federal securities laws across these investigations. 

7. Commission staff uncovered USBI’s misconduct after commencing a risk-based 

initiative to investigate the use of off-channel and unpreserved communications at brokerdealers. USBI has initiated a review of its recordkeeping failures and begun a program of 

remediation. As set forth in the Undertakings below, USBI will retain an independent 

compliance consultant to review and assess USBI’s remedial steps relating to its recordkeeping 

practices, policies and procedures, related supervisory practices, and employment actions. 

Respondent

8. USBI is a Delaware corporation with its principal office in St. Paul, Minnesota, and 

is registered with the Commission as a broker-dealer and investment adviser. 
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Recordkeeping Requirements under the Exchange Act

9. Section 17(a)(1) of the Exchange Act authorizes the Commission to issue rules 

requiring broker-dealers 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. 

10. The Commission adopted Rule 17a-4 pursuant to this authority. Rule 17a-4 

specifies the manner and length of time that the records created in accordance with other 

Commission rules, and certain other records produced by broker-dealers, must be maintained and 

produced promptly to Commission representatives. 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 broker-dealer’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. 

11. 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). 

USBI’s Policies and Procedures

12. USBI maintained certain policies and procedures designed to ensure the retention 

of business-related records, including electronic communications, in compliance with the 

relevant recordkeeping provisions. 

13. USBI 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 unapproved applications on their personal devices. 

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

subject to review, and archived. Messages sent through unapproved communications methods, 

specifically iMessage and SMS messages on personal devices, were not monitored, subject to 

review, or archived.

15. USBI policies were designed to address supervisors’ supervision of employees’ 

training in USBI’s communications policies and adherence to USBI’s books and recordkeeping 

requirements. Supervisory policies notified employees that electronic communications were 

subject to surveillance by USBI. USBI had procedures for all employees, including supervisors, 

requiring annual self-attestations of compliance. 
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16. USBI, however, failed to implement a system of follow-up and review to 

determine that supervisors were reasonably following USBI’s policies. While permitting 

employees to use approved communications methods, including on personal phones, for business 

communications, USBI failed to implement sufficient monitoring to assure that its recordkeeping 

and communications policies were being followed. 

USBI’s Recordkeeping Failures Across Its Brokerage Business

17. 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. USBI cooperated with the investigation by voluntarily

interviewing a sampling of senior personnel and gathering and reviewing messages found on the 

individuals’ personal devices. These personnel included senior leadership, such as a senior 

executive, senior vice presidents, and managing directors. 

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

communications at all seniority levels of USBI’s broker-dealer. The investigation determined 

that nearly all broker-dealer 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 USBI personnel, USBI broker-dealer customers, and other 

participants in the securities industry. Within USBI, significant numbers of senior personnel 

participated in off-channel communications. 

19. From at least January 2020, USBI personnel sent and received off-channel

messages that concerned the broker-dealer’s business. 

20. For example, a senior executive exchanged multiple off-channel business-related 

messages with at least three USBI colleagues, including a senior vice president and a senior 

leader. 

21. In addition, a managing director exchanged numerous off-channel businessrelated messages with at least nine USBI colleagues, an individual at another financial services 

firm, and one customer. Within USBI, the individual communicated with managing directors, a 

senior vice president, and junior employees under their supervision. 

22. Furthermore, a senior vice president exchanged numerous off-channel businessrelated messages with at least six USBI colleagues, four individuals at another financial services 

firm, one of which was also a customer, and one other market participant. Within USBI, the 

individual communicated with a managing director, a director, and junior employees under their 

supervision. 

USBI’s Failure to Preserve Required Records Potentially

Compromised and Delayed Commission Matters

23. Between January 2020 and October 2022, USBI received and responded to 

Commission subpoenas for documents and records requests in numerous Commission 

investigations. By failing to maintain and preserve required records relating to its broker-dealer 
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business, USBI likely deprived the Commission of these off-channel communications in various 

investigations. 

USBI’s Violations and Failure to Supervise

24. As a result of the conduct described above, from at least January 2020 through the 

date of this Order, Respondent 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. 

25. As a result of the conduct described above, Respondent 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. 

USBI’s Remedial Efforts

26. In determining to accept the Offer, the Commission considered steps promptly 

undertaken by USBI prior to and after being approached by Commission staff, and cooperation

afforded the Commission staff.

Undertakings

27. Prior to this action, Respondent enhanced its 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, Respondent has undertaken to: 

28. Independent Compliance Consultant.

a. USBI shall 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 USBI. 

b. USBI will oversee the work of the Compliance Consultant. 

c. USBI 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 

2

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

“‘means no more than that the person charged with the duty knows what he is doing.’” 

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)). 
6

below. USBI shall require that, within ninety (90) days of the date of the engagement 

letter, the Compliance Consultant conduct:

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

policies and procedures designed to ensure that USBI’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 USBI 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 USBI 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 

USBI 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 USBI has begun 

implementing to meet the record retention requirements of the federal securities 

laws, including an assessment of the likelihood that USBI personnel will use the 

technological solutions going forward and a review of the measures employed by 

USBI to track employee usage of new technological solutions. 

v. An assessment of the measures used by USBI 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 

USBI’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 USBI’s electronic communications surveillance routines 

to ensure that electronic communications through approved communications 

methods found on Personal Devices are incorporated into USBI’s overall 

communications surveillance program. 

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

address instances of non-compliance by USBI employees with USBI’s policies 

and procedures concerning the use of Personal Devices to communicate about 

USBI business in the past. This review shall include a survey of how USBI

determined which employees failed to comply with USBI policies and 

procedures, the corrective action carried out, an evaluation of who violated 
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policies and why, what penalties were imposed, and whether penalties were 

handed out consistently across business lines and seniority levels. 

d. USBI shall require that, within forty-five (45) days after completion of the 

review set forth in sub-paragraphs 28.c.i. through c.vii. above, the Compliance 

Consultant shall submit a detailed written report of its findings to USBI and to the 

Commission staff (the “Report”). USBI 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 USBI’s policies and procedures, and a summary of the 

plan for implementing the recommended changes in or improvements to USBI’s policies 

and procedures.

e. USBI 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 Report, USBI shall advise the Compliance Consultant and the 

Commission staff in writing of any recommendations that USBI considers to be unduly 

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

USBI considers unduly burdensome, impractical, or inappropriate, USBI 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 USBI’s policies or procedures on which 

USBI and the Compliance Consultant do not agree, USBI 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 USBI and the Compliance Consultant, USBI shall require that the Compliance 

Consultant inform USBI and the Commission staff in writing of the Compliance 

Consultant’s final determination concerning any recommendation that USBI considers to 

be unduly burdensome, impractical, or inappropriate. USBI shall abide by the 

determinations of the Compliance Consultant and, within sixty (60) days after final 

agreement between USBI and the Compliance Consultant or final determination by the 

Compliance Consultant, whichever occurs first, USBI shall adopt and implement all of 

the recommendations that the Compliance Consultant deems appropriate.

g. USBI shall cooperate fully with the Compliance Consultant and shall provide 

the Compliance Consultant with access to such of USBI’s files, books, records, and 

personnel as are reasonably requested by the Compliance Consultant for review.

h. USBI 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. USBI 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, Respondent 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. 

29. One-Year Evaluation. USBI shall require the Compliance Consultant to assess 

USBI’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 28.d above. USBI shall require this review to 

evaluate USBI’s progress in the areas described in Paragraph 28.c.i-vii above. After this review, 

USBI shall require the Compliance Consultant to submit a report (the “One Year Report”) to 

USBI and the Commission staff and shall ensure that the One Year Report includes an updated 

assessment of USBI’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. 

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

USBI shall notify the Commission staff as follows upon the imposition of any discipline imposed 

by USBI, 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 USBI’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. 

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

the One Year Report, USBI will also have its Internal Audit function conduct a separate audit(s) to 

assess USBI’s progress in the areas described in Paragraph 28.c.i-vii above. After completion of 

this audit(s), USBI shall ensure that Internal Audit submits a report to USBI and to the 

Commission staff.
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32. Recordkeeping. USBI 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. 

33. 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. 

34. Certification. USBI shall 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 Respondent agrees to provide such evidence. The certification and supporting 

material shall be submitted to Alison R. Levine, Assistant Regional Director, Division of 

Enforcement, New York Regional Office, Securities and Exchange Commission, 100 Pearl 

Street, Suite 20-100, New York, NY, 10004-2616, 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 Respondent’s Offer.

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

ORDERED that: 

A. Respondent 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. Respondent is censured. 

C. Respondent shall comply with the undertakings enumerated in paragraphs 27 to

34 above. 

 

 D. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $8,000,000 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) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request; 
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(2) Respondent 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) Respondent 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 

USBI as a Respondent 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 Thomas P. Smith, Jr., Associate

Regional Director, Securities and Exchange Commission, 100 Pearl Street, Suite 20-100, New 

York, New York 10004-2616. 

E. 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, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

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

a Penalty Offset, Respondent agrees that it 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 Respondent 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