11 Firms Fined $549M For Failing To Record Communications

• U.S. regulators have announced $549 million worth of charges against Wells Fargo and 10 other firms for failing to maintain proper records of electronic communications between employees.
• The SEC and CFTC found that the firms were using iMessage, WhatsApp and Signal without recording them in violation of federal securities laws.
• Firms are required to pay combined penalties totaling $289 million and have agreed to implement improved compliance policies and procedures in response to the violations.

Regulators Issue Half-Billion Dollar Fine

U.S. regulators have issued a half-billion dollar fine against Wells Fargo and 10 additional firms for a widespread record-keeping failure. A total of $549 million worth of charges have been brought forward by the U.S Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Failure To Record Electronic Communications

The investigation revealed that employees at all 11 firms had engaged in off-channel communications through iMessage, WhatsApp and Signal without properly recording them in accordance with federal securities laws. This failure led to substantial violations which resulted in hefty fines being imposed on each firm involved.

Penalties Imposed On All Firms

Wells Fargo was hit with a fine of $75 million from both the SEC and CFTC while BMO Capital Markets Corp, BNP Paribas, Société Générale, Wedbush Securities, Houlihan Lokey Capital, Moelis & Company, SMBC Nikko Securities America, Mizuho Securities and SG Americas Securities were given fines ranging from $35 – $75 million each from either one or both agencies respectively .

Reminders For Broker Dealers And Investment Advisors

Gurbir S Grewal , director of the SEC’s division made it clear that compliance with record keeping requirements is essential for investor protection as well as functioning markets . He also provided 3 takeaways for broker dealers who haven’t implemented these rules: self report , cooperate , remediate . If they follow these steps then they will be better off than if they wait for a call from regulators .

Conclusion

This is not the first time such fines have been imposed on financial institutions , however it serves as an important reminder as to why it is so crucial for companies to adhere to regulatory standards when engaging in business activities .

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