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Nine Wall Street companies have agreed to pay a total of $555mn in fines over messaging violations in the latest round of record-keeping charges filed by US regulators.
The US Securities and Exchange Commission accused broker-dealers including Wells Fargo and BNP Paribas of “widespread and longstanding failures . . . to maintain and preserve electronic communications”, and said on Tuesday it had agreed to receive combined penalties of $289mn from these companies.
The SEC charged nine parent companies, five of which faced similar charges brought by the Commodity Futures Trading Commission. The derivatives regulator on Tuesday imposed $266mn in fines on five swap dealers and futures brokers — BNP Paribas, Société Générale, Wells Fargo, Bank of Montreal and Wedbush Securities — for messaging violations.
The charges are the latest step in a sweeping regulatory challenge against record-keeping failures, with long-running investigations costing some bankers their jobs and pushing businesses to crack down on the illicit use of external messaging platforms.
“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,” Gurbir Grewal, director of the SEC’s enforcement division, said in a statement.
According to the SEC, companies admitted that from at least 2019, staff communicated about business matters via platforms including WhatsApp and Signal. The companies failed to keep a “substantial majority” of these messages, the regulator said.
The CFTC said that firms failed to “maintain, preserve or produce records that were required to be kept under CFTC record-keeping requirements” as well as “diligently supervise” business matters.
“The commission’s message could not be more clear — record-keeping and supervision requirements are fundamental, and registrants that fail to comply with these core regulatory obligations do so at their own peril,” Ian McGinley, the CFTC’s director of enforcement, said in a statement.
Wells Fargo agreed to the highest total penalty of $200mn, while BNP Paribas and Société Générale are each subject to the second-largest fines at $110mn. Wells Fargo said it was “pleased to resolve this matter” while BNP Paribas and Société Générale declined to comment.
Bank of Montreal said it was “pleased to have this matter behind” it and said it had “made significant enhancements” to compliance procedures in recent years. Moelis, Houlihan Lokey, Mizuho and SMBC declined to comment, while Wedbush did not immediately respond to a request for comment.
The other companies named in the regulatory orders — Bank of Montreal, Mizuho, Houlihan Lokey Capital, Moelis & Company, Wedbush Securities and SMBC Nikko Securities America — agreed to pay total fines ranging from $9mn to $60mn. Moelis, Houlihan Lokey, Mizuho and SMBC declined to comment, while the others did not immediately respond to a request for comment.
Grewal said the SEC had so far brought 30 enforcement actions and imposed more than $1.5bn in penalties in connection with record-keeping failures, while McGinley said the CFTC had brought challenges against 18 businesses and ordered more than $1bn in penalties.
Eleven separate Wall Street banks and brokers in September agreed to pay more than $1.8bn in fines over similar charges brought by US regulators.
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