Wall Street Regulators Fine Big Banks for Recordkeeping Failures

By Dean Seal

Wall Street's top regulators are fining major banking firms hundreds of millions of dollars for failing to keep staffers' iPhone texts and Signal messages about company business.

The U.S. Securities and Exchange Commission said Tuesday that it had sued 11 firms over the use of "off-channel" messaging platforms. The firms have admitted to the allegations and are settling the claims with a combined $289 million in fines.

The U.S. Commodity Futures Trading Commission has simultaneously filed its own lawsuits tied to the same conduct against four of the financial institutions, which are settling for a combined $260 million in penalties.

Since at least 2019, employees at firms including Wells Fargo Securities and BMO Capital Markets have used platforms such as iMessage, WhatsApp, and Signal to communicate for work purposes, but their firms didn't maintain or preserve a substantial majority of those communications, according to the SEC.

The failures involved employees at multiple levels of authority within the firms, including supervisors and senior executives, the agency said.

The firms have admitted to the facts set forth in SEC orders against them.

Wells Fargo Securities, along with Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network, have agreed to pay a $125 million fine to resolve the SEC case against them.

BNP Paribas Securities and SG Americas Securities have each agreed to pay the SEC a $35 million penalty. BMO Capital Markets and Mizuho Securities USA will each pay $25 million fines. Houlihan Lokey Capital has agreed to a $15 million penalty. Moelis & Company and Wedbush Securities are each paying $10 million penalties, while SMBC Nikko Securities America has agreed to a $9 million fine.

The CFTC has meanwhile closed cases against BNP Paribas, Société Générale and Wells Fargo, which are each paying $75 million fines to the derivatives regulator. Bank of Montreal is paying a $35 million penalty to resolve the case against it.

Ian McGinley, the CFTC's director of enforcement, noted that his agency has collected more than $1 billion in penalties for violations of recordkeeping requirements tied to the use of off-channel platforms. The SEC has been pursuing a similar crackdown in recent years.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

August 08, 2023 10:47 ET (14:47 GMT)

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