SEC Penalizes 16 Wall Street Firms For Using Personal Devices To Discuss Trades, Clients

SEC Penalizes 16 Wall Street Firms For Using Personal Devices To Discuss Trades, Clients
  • The U.S. Securities and Exchange Commission has charged 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures to maintain and preserve electronic communications. 
  • The firms admitted the facts outlined in their respective SEC orders and acknowledged that their conduct violated recordkeeping provisions of the federal securities laws.
  • The firms have agreed to pay combined penalties of more than $1.1 billion and have begun implementing improvements to their compliance policies and procedures to settle these matters.
  • Barclays plc BCSBank of America Corp BACCitigroup Inc CCredit Suisse Group AG CSDeutsche Bank AG DBGoldman Sachs Group Inc GSMorgan Stanley MS, and UBS Group AG UBS will have to pay $125 million each as penalties. 
  • Jefferies LLC and Nomura Securities International Inc will pay $50 million each. Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.
  • From January 2018 through September 2021, the banks' staff routinely communicated business matters such as debt and equity deals with colleagues, clients, and other third-party advisers using applications on their personal devices such as text messages and WhatsApp, the agencies said.
  • The institutions did not preserve most of those personal chats, violating federal rules requiring broker-dealers and other financial institutions to preserve business communications. 
  • "Today's actions – both in terms of the firms involved and the size of the penalties ordered – underscore the importance of recordkeeping requirements: they're sacrosanct. If there are allegations of wrongdoing or misconduct, we must be able to examine a firm's books and records," said Gurbir Grewal, director of the SEC's Division of Enforcement.
  • The failings occurred across all 16 firms and involved employees at multiple levels, including senior and junior investment bankers and traders.
  • Photo Via Wikimedia Commons

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