SAN FRANCISCO (dpa-AFX) - The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission issued fines against several financial firms, including Wells Fargo and BNP Paribas, for failing to maintain records of employee communications on unapproved platforms. The Regulators ordered the financial institutions to pay combined penalties of about $550 million.
The SEC announced charges against 10 firms in their capacity as broker-dealers and one dually registered broker-dealer and investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms agreed to pay combined penalties of $289 million, and have begun implementing improvements to their compliance policies and procedures to address the violations.
According to the SEC, Wells Fargo Securities, LLC together with Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC agreed to pay a $125 million penalty; BNP Paribas Securities Corp. and SG Americas Securities, LLC have each agreed to pay penalties of $35 million; BMO Capital Markets Corp. and Mizuho Securities USA LLC have each agreed to pay penalties of $25 million;Houlihan Lokey Capital, Inc. has agreed to pay a $15 million penalty;Moelis & Company LLC and Wedbush Securities Inc. have each agreed to pay penalties of $10 million; and SMBC Nikko Securities America, Inc. has agreed to pay a $9 million penalty.
The SEC said that its investigation uncovered pervasive and longstanding 'off-channel' communications at all 11 firms. The firms admitted that from at least 2019, their employees often communicated through various messaging platforms on their personal devices, including iMessage, WhatsApp, and Signal, about the business of their employers. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.
In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and was censured. The firms also agreed to retain independent compliance consultants to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures, the SEC said in a statement.
Separately, the Commodity Futures Trading Commission ordered four financial institutions to pay total of $260 Million for recordkeeping and supervision failures for widespread use of unapproved communication methods.
Wells Fargo agreed to pay a $75 million penalty; BNP Paribas agreed to pay penalties of $75 million; Société Générale agreed to pay a $75 million penalty; Bank of Montreal agreed to pay penalties of $35 million.
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