Signage at a Wells Fargo bank branch in New York, US, on Wednesday, March 29, 2023. Photographer: Angus Mordant/Bloomberg In all, the CFTC announced penalties of $266 million, and the SEC said firms had agreed to pay it $289 million. Total fines for the probes into messaging practices have now crossed $2.5 billion, making it one of the biggest US enforcement efforts of the past decade.
What began as a look at trading desks’ use of chat apps has expanded into a look into all of finance’s use of any kind of communication tool that doesn’t save records appropriately. Hedge funds and private equity are also under investigation for their use of personal communication apps.
Wells Fargo spokesperson Laurie Kight said in a statement that the company was pleased to resolve the matter. BNP declined to comment.
Financial firms are required to scrupulously monitor and save communications involving their business to head off improper conduct.
Investigations Harder
Regulators say that using messaging tools that delete communications automatically makes it significantly harder to investigate wrongdoing.
Tuesday’s actions follow a string of cases released last September. At the time, the SEC announced $1.1 billion in fines against firms including Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc., while the CFTC said firms agreed to pay $710 million in penalties. In May, HSBC Holdings Plc and Scotiabank settled regulators’ probes into their communications practices, paying fines of $45 million and $22.5 million, respectively.
Why Wall Street Is in Hot Water for Using WhatsApp: QuickTake
On Tuesday, the SEC said that its investigation “uncovered pervasive and longstanding off-channel communications.” As part of the settlements, the companies admitted that their employees had used platforms like iMessage, WhatsApp and Signal to discuss business. The companies didn’t maintain sufficient records, according to the SEC. The CFTC said it found similar violations.
Other notable firms that agreed to settle on Tuesday included units of Bank of Montreal, Mizuho Financial Group and Societe Generale SA.
A BMO spokesperson said that the firm has “made significant enhancements to our compliance procedures in recent years,” and was pleased to have resolved the probe. Mizuho, SocGen, Houlihan Lokey Inc., Moelis & Company LLC and SMBC Nikko declined to comment on Tuesday’s announced settlements. A representative for Wedbush Securities Inc. didn’t respond to a request for comment.