NEW YORK: Large Wall Street firms agreed to pay US$1.8 billion (RM8.3 billion) in fines over failures to keep electronic records such as text messages between employees on personal mobile phones, US authorities announced on Tuesday (Sept 27).
Barclays, Bank of America, Deutsche Bank and Goldman Sachs were among the firms that agreed to fines over “longstanding failures” to maintain and preserve electronic communications that must be available to regulators in the course of oversight, the Securities and Exchange Commission (SEC) said in a statement.
The SEC announced a total of US$1.1 billion in fines on 16 institutions in all. The 16 firms listed included some companies such as Morgan Stanley with affiliated firms also covered by the agreement.
In a parallel action, the Commodity Futures Trading Commission (CFTC) announced it reached settlements totalling US$710 million from the same group of financial institutions over the same offences.
“Finance, ultimately, depends on trust. By failing to honour their record-keeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” SEC chair Gary Gensler said in a statement. “Since the 1930s, such record-keeping has been vital to preserve market integrity.
“As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications.”
An SEC investigation uncovered “pervasive off-channel communications” involving a range of senior and junior investment bankers and traders – omissions that “likely” deprived it of communications in agency probes, it said.
Bank of America was fined a total of US$225 million under the two settlements.
Financial giants agreeing to US$200 million in settlements were Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS.
Nomura, Jefferies and Cantor Fitzgerald will pay respectively US$100, US$80 and US$16 million.
In a major victory for the agencies, the institutions admitted the facts and acknowledged that they violated federal laws, although Bank of America and Nomura neither admitted nor denied aspects of the CFTC's investigative findings, it said.
The institutions, which cooperated with the investigation, have begun implementing improvements to their compliance policies and procedures, the SEC said.
Spokespeople for UBS, Morgan Stanley and Citi said the banks were pleased to have resolved the matter. Bank of America, Barclays, Goldman Sachs, Nomura and Credit Suisse declined to comment.
The SEC in December 2021 fined JPMorgan Chase US$125 million for the offence, spurring an industry-wide regulatory crackdown on poor record-keeping, the SEC said. – AFP, Reuters