US regulators imposed fines totalling almost $393 million on more than two dozen financial firms after a probe found they had failed to retain electronic communications as required by federal law.
The US Securities and Exchange Commission announced the settlements on Wednesday, accusing the 26 financial institutions of “widespread and longstanding failures” to follow communications protocols.
The fines of $392.75 million add to the billions of banks that have already been sanctioned over improper use of personal phones and messaging services such as WhatsApp.
“Each of the SEC’s investigations uncovered pervasive and longstanding use of unapproved communication methods, known as off-channel communications, at these firms,” Wall Street’s government watchdog and rule enforcer said in a statement announcing the settlements.
“These failures involved personnel at multiple levels of authority, including supervisors and senior managers,” it said.
Four companies, Ameriprise Financial Services, Edward D. Jones & Co., LPL Financial and Raymond James & Associates, have each agreed to pay a $50 million penalty.
Among the other companies fined is a unit of the Royal Bank of Canada (RBC), which will have to pay $45 million, and Bank of New York Mellon Corporation, which will pay $40 million.
Parts of Toronto-Dominion Bank (TD Bank) and Truist Financial have also been sanctioned.
The SEC said the firms agreeing to the settlement admitted to breaking recordkeeping rules.
After a separate investigation, the US Commodity Futures Trading Commission (CFTC) also announced settlements on Wednesday for the same kinds of violations.
It required TD Bank to pay $75 million and Cowen and Company $3 million in civil monetary penalties.
The CFTC found the companies had “failed to stop employees, including those at senior levels, from communicating using unapproved communication methods, including messages sent via personal text.”
“These written communications generally were not maintained and preserved by the firms” even though they are required to do so because they relate to market activities registered with the CFTC, it said.
While financial firms must preserve business communications in case of accusations of wrongdoing, many have faced fines for violating those rules.
US banking giant JPMorgan Chase agreed in late 2021, for similar reasons, to pay a $125 million penalty to the SEC and another $75 million to the CFTC.
Several Wall Street institutions, including Citigroup, Goldman Sachs, subsidiaries of Deutsche Bank and UBS, agreed in September 2023 to pay a total of $1.82 billion in penalties for failing to properly retain messages their employees had exchanged on personal devices.
AFP
