US regulators hit more Wall Street firms with record-keeping fines

2023-08-08 22:20

By Chris Prentice WASHINGTON (Reuters) -U.S. regulators on Tuesday hit another batch of Wall Street firms with $549 million in

By Chris Prentice

WASHINGTON (Reuters) -U.S. regulators on Tuesday hit another batch of Wall Street firms with $549 million in civil penalties over widespread record-keeping failures related to employees' use of personal text messages and other messaging apps.

Eleven firms, including Wells Fargo Securities and BNP Paribas Securities Corp, have agreed to pay $289 million in fines to the U.S. Securities and Exchange Commission to resolve the allegations.

The Commodity Futures Trading Commission separately fined affiliates of five of the same group another $260 million for related issues: Wells Fargo, BNP Paribas, Société Générale, the Bank of Montreal and Wedbush Securities Inc.

The fines are the latest in a series of investigative enforcement actions by the regulators aimed at use of so-called "off-channel" communications such as text and WhatsApp messages. Regulators require broker dealers and investment advisers to keep certain work-related communications, but Wall Street dealers have increasingly used personal devices in recent years.

Spokespeople for Wells Fargo, which has agreed to pay $200 million in penalties to the SEC and CFTC, and Bank of Montreal, which agreed to pay $50 million, said the firms are pleased to have resolved the matter.

Spokespeople for BNP, which agreed to pay $110 million to the regulators, and Mizuho, which agreed to pay $25 million to the SEC, declined to comment.

SMBC Nikko Securities, which will pay $9 million to the SEC, declined to comment.

Representatives for the other firms did not respond immediately to requests for comment.

The regulators have already fined units of JPMorgan Chase and Co , Barclays, Bank of America and others for similar record-keeping failures.

After announcing a wave of such actions last September, the SEC launched new rounds of investigations into investment advisers and other broker dealers, Reuters was first to report in October.

"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," SEC enforcement director Gurbir Grewal said in a statement.

(Reporting Chris Prentice in New York; Additional reporting by Susan Heavey and Doina Chiacu in Washington, Nivedita Balu in Toronto and Nupur Anand and Saeed Azhar in New York; editing by Bernadette Baum and Jason Neely)