U.S. regulators reached settlements with a dozen banks in a sprawling investigation into how global financial firms failed to monitor employee communications on unauthorized messaging apps, raising the total penalties in the case to more of 2 billion dollars.
The Securities and Exchange Commission announced $1.1 billion in fines and the Commodity Futures Trading Commission disclosed $710 million in penalties in separate filings Tuesday. These rates, against companies such as Bank of America Corp., Citigroup Inc. and Goldman Sachs Group Inc., combined with JPMorgan Chase & Co.’s $200 million fines. as of December, they bring the total to $2.01 billion, making them the largest penalties. never against US banks for lack of records.
“Finance ultimately depends on trust. By failing to meet their record-keeping and book-keeping obligations, the market participants we charged today failed to uphold that trust,” said the president of the SEC, Gary Gensler, in the agency’s statement. “As technology changes, it is even more important that registrants conduct their communications about business matters appropriately only within official channels, and they must maintain and preserve those communications.”
Tuesday’s announcements cap months of discussions between regulators and banks. Morgan Stanley said in July it was nearing a settlement that would require it to pay a $200 million fine, and other major banks also disclosed they were setting aside similar figures as part of their unspecified second-quarter results the reason.
JPMorgan had been the only bank so far to settle with regulators, and was the first to report the fines, in December. Even CEOs and other senior supervisors at the largest U.S. bank had evaded regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication, regulators said in that moment
Financial companies must scrupulously monitor communications related to their business to avoid inappropriate conduct. That system, already challenged by the proliferation of mobile messaging apps, was further strained as companies sent workers home soon after the start of the Covid-19 outbreak.
In the SEC investigation, eight companies agreed to penalties of $125 million each: Barclays Plc, Bank of America, Citigroup, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs, Morgan Stanley and UBS Group AG. Jefferies Financial Group Inc. and Nomura Holdings Inc. they agreed to pay $50 million each, and Cantor Fitzgerald LP agreed to pay $10 million.
Bank of America had the largest CFTC penalty at $100 million, followed by Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS at $75 million each. Nomura was fined $50 million, Jefferies $30 million and Cantor Fitzgerald $6 million.
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