Some 15 banks and one investment adviser have agreed to pay penalties totaling more than $1.1B to settle the Securities and Exchange Commission's investigation into recordkeeping of their employees' communications, the SEC said Tuesday.
News of the probe into bank employees' use of personal devices for business communications had surfaced in 2021
The SEC alleged widespread failures by the firms and their employees to maintain and preserve electronic communications. The companies have admitted to the facts set forth in the SEC orders, acknowledged that their actions violated recordkeeping provisions of federal securities laws, agreed to pay penalties, and have started making improvements to their compliance policies and procedures, the SEC said.
Eight firms agreed to pay penalties of $125M each:
- Barclays Capital (NYSE:BCS);
- BofA Securities (NYSE:BAC) together with Merrill Lynch, Pierce, Fenner & Smith;
- Citigroup Global Markets (NYSE:C);
- Credit Suisse Securities ("USA") (NYSE:CS);
- Deutsche Bank Securities (NYSE:DB) together with DWS Distributors and DWS Investment Management Americas;
- Goldman Sachs (NYSE:GS);
- Morgan Stanley (NYSE:MS) together with Morgan Stanley Smith Barney; and
- UBS Securities LLC (NYSE:UBS) together with UBS Financial Services.
Cantor Fitzgerald & Co. agreed to pay a $10M penalty.
From January 2018 through September 2021, the firms' employees routinely communicated about business matters using text messaging apps on their personal devices, the SEC said.
"Since the 1930s, such recordkeeping has been vital to preserve market integrity," said SEC Chair Gary Gensler. "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."
Separately, the Commodities Futures Trading Commission announced settlements with the firms for related conduct.