U.S. regulators have imposed $549 million in penalties against Wells Fargo and several other smaller or non-U.S. firms for failing to maintain proper electronic records of employee communications. The Securities and Exchange Commission (SEC) announced charges and fines amounting to $289 million against 11 firms, highlighting their “widespread and longstanding failures” in record-keeping. The Commodity Futures Trading Commission (CFTC) also fined four banks a combined total of $260 million for failing to uphold record-keeping requirements. This enforcement action represents the regulators’ ongoing campaign to curb using secure messaging apps like Signal, WhatsApp, and iMessage among Wall Street employees. The initiative began in late 2021 and has resulted in settlements with major players such as JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Citigroup, amassing over $2 billion in fines related to the issue, as stated by the SEC and CFTC.
The implicated firms admitted to using platforms like WhatsApp for business discussions, violating federal securities laws by not preserving records. Wells Fargo, a relatively smaller player on Wall Street, received the largest fines among the penalized banks, amounting to $200 million. French banks BNP Paribas and Societe Generale were each fined $110 million, while Bank of Montreal faced a $60 million penalty. Japanese firms Mizuho Securities and SMBC Nikko Securities, along with U.S. boutique investment banks such as Houlihan Lokey, Moelis, and Wedbush Securities, were also fined. Aside from the monetary penalties, the banks were instructed to “cease and desist” from future violations and bring in consultants to assess their policies, according to the SEC. On Wall Street, maintaining records of communications via official channels is crucial to comply with fairness requirements, although using side channels for business communication has been a concern due to potential legal and regulatory risks stemming from unrecorded conversations.
