ALBAWABA - American regulators announced a collective penalty of $549 million against Wells Fargo and a group of smaller banks and foreign financial institutions for their failure to maintain electronic records of employee communications.
The Securities and Exchange Commission (SEC) revealed allegations and fines totalling $289 million against 11 banking entities for "widespread and long-standing" record-keeping failures. Additionally, the Commodity Futures Trading Commission fined four banks a total of $260 million for their inability to retain required records.
This move comes as the latest regulatory effort to curb the widespread use of secure messaging applications like Signal, WhatsApp, or iMessage by Wall Street employees and executives.
Starting in late 2021, regulatory bodies secured settlements with major players, including JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Citigroup. The total fines related to these actions exceeded $2 billion, according to the committee.
Sanjay Wadhwa, Deputy Director of Enforcement at the SEC, stated, "Today's actions are part of our ongoing efforts to ensure compliance by regulated entities, including broker-dealers, traders, and investment advisers, with their record-keeping requirements, which are essential for us to monitor compliance with and enforce federal securities laws."
The implicated institutions acknowledged that since at least 2019, employees had utilized alternative channels such as WhatsApp to discuss company matters and had failed to retain records, constituting a "violation of federal securities laws," as stated by the SEC on Tuesday.
Wells Fargo, the fourth-largest U.S. bank by assets, faced the majority of the penalties on Tuesday, amounting to $200 million. French banks BNP Paribas and Societe Generale were fined $110 million each, while Bank of Montreal received a $60 million penalty.
The Japanese Securities and Exchange Surveillance Commission also fined securities companies Mizuho and SMBC Nikko, as well as American commercial investment banks such as Houlihan Lokey, Moelis, and Wedbush Securities.
The banks penalized on Tuesday declined to comment.
