Wells Fargo & Co. and BNP Paribas SA are among the companies slated to pay substantial penalties totaling hundreds of millions of dollars due to their employees’ use of unofficial communication platforms such as WhatsApp for conducting business.
This development marks the latest initiative by US regulatory bodies to tighten their grip on Wall Street’s record-keeping practices.
The Securities and Exchange Commission (SEC) disclosed on Tuesday that Wells Fargo units have agreed to a $125 million settlement, while BNP Paribas will pay $35 million for the same offenses.
Moreover, both of these financial institutions will also pay $75 million each to the Commodity Futures Trading Commission (CFTC) for comparable violations committed by their derivatives brokerage divisions.
In total, the CFTC has levied penalties amounting to $260 million, while the SEC has secured agreements from firms to pay a combined $289 million.
Over the past few years, the SEC and CFTC have been intensifying their efforts to counter firms’ evasion of regulatory oversight by using communication platforms like WhatsApp and personal email accounts for business-related interactions.
Financial organizations are legally obligated to rigorously monitor communications relevant to their operations in order to prevent illicit activities.
Regulators have emphasized that the failure to adequately archive messages can impede investigations into misconduct.
The SEC, in its statement on Tuesday, revealed that its inquiry had uncovered widespread and long-standing instances of off-channel communications at 11 different firms. As part of the settlement agreements, these companies acknowledged that their employees had utilized platforms such as iMessage, WhatsApp, and Signal for business discussions. According to the SEC, these companies failed to maintain satisfactory records. The CFTC reported similar findings.
Among other prominent firms agreeing to settlements on Tuesday were units of Bank of Montreal, Mizuho Financial Group, and Societe Generale SA.
These actions come on the heels of a series of comparable high-profile cases that emerged in the previous September. At that time, the SEC announced fines totaling $1.1 billion against firms including Bank of America Corp., Citigroup Inc., and Goldman Sachs Group Inc.
Concurrently, the CFTC disclosed that firms had agreed to pay penalties totaling $710 million.
