WASHINGTON–Numerous big banks, including Wells Fargo, have been hit with a combined $549 million in fines for failing to maintain electronic records of employee communications.
The Securities and Exchange Commission disclosed charges and $289 million in fines against 11 firms for "widespread and longstanding failures" in record-keeping, while the Commodity Futures Trading Commission also said it fined four banks a total of $260 million for failing to maintain records required by the agency.
“It was regulators' latest effort to stamp out the pervasive use of secure messaging apps like Signal, WhatsApp or Apple's iMessage by Wall Street employees and managers,” MSNBC reported. Fines related to the issue total more than $2 billion, according to the SEC and CFTC.
A ‘Continuing Sweep’
"Today's actions stem from our continuing sweep to ensure that regulated entities, including broker-dealers and investment advisers, comply with their recordkeeping requirements, which are essential for us to monitor and enforce compliance with the federal securities laws," Sanjay Wadhwa, deputy director of enforcement at the SEC, said in the release.
The firms admitted that from at least 2019, employees used side channels like WhatsApp to discuss company business, failing to preserve records "in violation of federal securities laws," the SEC said.
Wells Fargo is Biggest Offender
Already mired in numerous other scandals and settlements, Wells Fargo, the fourth biggest U.S. bank by assets, was hit with the biggest fines, $200 million in total.
French banks BNP Paribas and Societe Generale were fined $110 million each, while the Bank of Montreal was fined $60 million. The SEC also fined Japanese firms Mizuho Securities and SMBC Nikko Securities and boutique U.S. investment banks including Houlihan Lokey, Moelis and Wedbush Securities.
Cease & Desist Order
Apart from the fines, banks were ordered to "cease and desist" from future violations and hire consultants to review bank policies, the SEC said.
“On Wall Street, company records of emails and other communications via official channels are often automatically generated to adhere to requirements that clients are treated fairly,” noted MSNBC. “But after some of the industry's biggest scandals of the past decade hinged on incriminating messages preserved in chatrooms, workers often leaned on side channels to conduct business.”
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