WhatsApp, Signal and iMessage Misuse: Wells Fargo and 10 Other Firms Confront $549 Million Fine

Wells Fargo along with ten other companies have recently been slapped with an enormous fine of half-a-billion dollars by US regulators. The reason behind this hefty penalty is a pervasive failure in maintaining proper records.

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have levied a combined fine of $549 million on Wells Fargo, Bank of Montreal, 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.

According to the SEC, these firms and their personnel failed to uphold appropriate electronic communications, leading to a breach of securities legislation. The regulatory body's investigation unearthed a history of "off-channel" interactions among staff members via iMessage, WhatsApp, and Signal that discussed their employer's business affairs.

The SEC highlighted that a "significant majority" of these discussions were never documented, which contravenes federal securities laws. The firms recognized their contravention of the federal laws' record-keeping stipulations, agreed to pay a cumulative penalty of $289 million, and began introducing enhancements to their compliance protocols and procedures to address these violations.

Parallel charges were brought against BNP Paribas, Société Générale, Wells Fargo, and the Bank of Montreal by the CFTC, with individual penalties of $75 million each and $35 million for the Bank of Montreal.

Gurbir S. Grewal, Director of the SEC's Division of Enforcement, emphasized the importance of compliance with the books and records requirements of the federal securities laws to protect investors and maintain healthy markets. To date, the Commission has executed 30 enforcement actions and ordered over $1.5 billion in penalties to reinforce this core message. Grewal's advice for firms yet to comply is to self-report, cooperate, and remediate for better outcomes rather than wait for regulatory intervention.

These penalties are the most recent in a series paid by traditional financial institutions. Just last month, Credit Suisse was penalized over a quarter billion dollars for its association with Bill Hwang, an investor who lost nearly $20 billion in mere hours due to excessive leverage and poor trading decisions.

Aug 13, 2023

0 0