US regulators just hit Wells Fargo and 10 additional firms with a half-billion dollar fine for a widespread record-keeping failure.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have announced a total of $549 million worth of charges against Wells Fargo, the Bank of Montreal, BMO Capital Markets Corp, BNP Paribas, Société Générale, Wedbush Securities, Houlihan Lokey Capital, Moelis & Company, SMBC Nikko Securities America, Mizuho Securities and SG Americas Securities.
The SEC says that the firms and their employees failed to maintain proper electronic communications to a point where it violated securities laws.
The regulator says that its investigation revealed longstanding “off-channel” communications at all of the firms between employees through iMessage, WhatsApp and Signal about the business of their employers.
A “substantial majority” of these communications were never recorded, in violation of federal securities laws, according to the SEC.
“[The firms] acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of $289 million as outlined below, and have begun implementing improvements to their compliance policies and procedures to address these violations.”
The CFTC brought similar charges against BNP Paribas, Société Générale, Wells Fargo and the Bank of Montrreal with separate fines of $75 million, $75 million, $75 million and $35 million respectively.
Says Gurbir S. Grewal, Director of the SEC’s Division of Enforcement,
“Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets. To date, the Commission has brought 30 enforcement actions and ordered over $1.5 billion in penalties to drive this foundational message home. And while some broker-dealers and investment advisers have heeded this message, self-reported violations, or improved internal policies and procedures, today’s actions remind us that many still have not…
So here are three takeaways for those firms who haven’t yet done so: self-report, cooperate and remediate. If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling.”
The fines are the latest in a series being paid by legacy financial institutions.
Last month, Credit Suisse was fined more than a quarter billion dollars for its connection to Bill Hwang, an investor who lost nearly $20 billion in a matter of hours due to overly aggressive leverage and poor trades.Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
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