U.S. regulators have slapped fines totaling nearly $393 million on over two dozen financial firms for not keeping electronic communications as required by federal law.
The U.S. Securities and Exchange Commission (SEC) announced these penalties on Wednesday, pointing to what they called “widespread and longstanding failures” across 26 financial institutions to adhere to communication protocols.
These fines, amounting to $392.75 million, add to the substantial penalties already imposed on banks for the improper use of personal devices and messaging apps like WhatsApp.
In a statement, the SEC highlighted that its investigations revealed extensive and ongoing use of unauthorized communication methods within these firms, involving employees at various levels, including supervisors and senior managers.
Among the companies fined, Ameriprise Financial Services, Edward D. Jones & Co., LPL Financial, and Raymond James & Associates each agreed to pay $50 million. Other companies, such as a unit of the Royal Bank of Canada (RBC), were fined $45 million, while the Bank of New York Mellon Corporation was hit with a $40 million penalty. Parts of Toronto-Dominion Bank (TD Bank) and Truist Financial also faced sanctions.
The SEC noted that the firms involved in the settlement admitted to violating recordkeeping rules.
Additionally, the U.S. Commodity Futures Trading Commission (CFTC) announced similar settlements on Wednesday. TD Bank was required to pay $75 million, while Cowen and Company faced a $3 million penalty.
The CFTC found that these companies had failed to prevent their employees, including those in senior positions, from using unauthorized communication methods like personal texts. These messages, which were supposed to be preserved due to their connection to market activities, were not maintained as required by law.
Financial firms are obligated to retain business communications to address potential allegations of misconduct. However, many have faced significant fines for failing to do so. For example, in late 2021, JPMorgan Chase agreed to pay a $125 million penalty to the SEC and an additional $75 million to the CFTC for similar violations.
Earlier in September 2023, several major Wall Street institutions, including Citigroup, Goldman Sachs, and subsidiaries of Deutsche Bank and UBS, agreed to pay a collective $1.82 billion in fines for not properly preserving messages exchanged by employees on personal devices.
