The Securities and Exchange Commission has charged 11 firms – including Bank of Montreal and Mizuho Financial Group units – over “widespread and longstanding” failures to maintain and preserve electronic communications. The companies will pay penalties totalling $289 million, with Well Fargo units facing the biggest hit – $125 million.
The Commodity Futures Trading Commission has hit some of the same firms – including Wells Fargo and Bank of Montreal units – with penalties totaling $266 million for similar offences.
The latest settlements come after the SEC in September fined firms including Bank of America, Citi and Goldman Sachs a total of $1.1 billion.
The firms were investigated over traders and brokers’ use of personal messaging services to discuss investment terms, client meetings and other business. The use of WhatsApp and similar personal messaging services to conduct or discuss bank business violates regulatory requirements. However, the switch to working from home in the midst of the pandemic saw a rise in the use of these services.
The firms admitted that from at least 2019, their employees often communicated through iMessage, WhatsApp, and Signal about the business of their employers. The firms did not maintain or preserve most of these off-channel communications, in violation of the federal securities laws.
The SEC has now handed out over $1.5 billion in penalties and director of the watchdog’s division of enforcement Gurbir Grewal warned that more companies are in its sights.
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