US regulators fine Wall Street firms $549 million in latest texting probe
Reuters
Published Aug 08, 2023 22:28
By Chris Prentice
WASHINGTON (Reuters) -U.S. regulators on Tuesday fined nine Wall Street companies, including Wells Fargo (NYSE:WFC), BNP Paribas (EPA:BNPP) and Société Générale (EPA:SOGN) $549 million over employees' use of personal messaging apps to discuss deals, trades and other business.
The penalties mark the latest wave of a sweeping two-year enforcement probe targeting Wall Street's use of so-called "off channel" work communications such as text and WhatsApp messages in breach of rules which require firms to retain certain work-related communications.
Wells Fargo, BNP Paribas, SocGen, the Bank of Montreal,, boutique brokers Wedbush Securities, Moelis & Company, and Houlihan Lokey, and Japanese brokers Mizuho and SMBC Nikko Securities agreed to pay a combined $289 million to the U.S. Securities and Exchange Commission (SEC), the agency said.
Wells Fargo, BNP Paribas, SocGen, BMO, and Wedbush will pay a further $260 million to the Commodity Futures Trading Commission (CFTC) for similar violations, the regulator said in a separate statement.
All nine firms admitted that from at least 2019 their employees often communicated on personal devices using iMessage, WhatsApp and Signal, the SEC said, in what the regulator said was a "pervasive and longstanding" violation of its record-keeping rules.
Spokespeople for Wells Fargo, which agreed to pay $200 million in penalties to the SEC and CFTC, and Bank of Montreal, which agreed to pay $60 million, said the firms are pleased to have resolved the matter. Spokespeople for the other companies either declined to comment, or did not respond to requests for comment.
Since late 2021, the SEC and CFTC have been probing broker dealers over the record-keeping failures. JPMorgan Chase (NYSE:JPM) and Co, Barclays (LON:BARC), Bank of America (NYSE:BAC) and others have shelled out more than $2 billion in related fines.
"The regulators are clearly trying to send a message to Wall Street with the scale of the fines," said Christine Lombardo, a partner with Morgan Lewis & Bockius law firm. "I do not think it's going away. Part of the problem is that this is a truly hard issue for firms to navigate."
While it is standard practice at most banks to maintain records of employees' email communications, firms have struggled to get employees to reliably use approved channels for more spontaneous or casual communications.
After announcing a wave of actions against big Wall Street banks last September, regulators launched a new investigative sweep into investment advisers, Reuters was first to report.
Get The App
We "know that other SEC-regulated entities have committed similar violations, and so our work to enforce industry-wide compliance continues," SEC deputy enforcement director Sanjay Wadhwa said in a statement.
Spokespeople for BNP, which agreed to pay a combined $110 million; Societe Generale SA, which agreed to pay a combined $110 million; Mizuho, which agreed to pay $25 million to the SEC; Houlihan Lokey, which agreed to pay $15 million to the SEC; SMBC Nikko Securities, which will pay $9 million to the SEC, and Moelis, which agreed to pay $10 million to the SEC, all declined to comment.
Representatives for Wedbush, which agreed to pay $16 million to the regulators, did not immediately respond to requests for comment.
(Reporting Chris Prentice in New York; Additional reporting by Susan Heavey and Doina Chiacu in Washington, Nivedita Balu in Toronto and Nupur Anand, Lananh Nguyen, Saeed Azhar in New York; Editing by Michelle Price, Bernadette Baum, Jason Neely and Aurora Ellis)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.