(New York) Several Wall Street establishments have agreed to pay a total of 1.82 billion dollars in penalties to the American financial market authorities for not having correctly stored the messages exchanged by their employees from their personal mobile devices.
Updated yesterday at 6:03 p.m.
Citigroup, Goldman Sachs, Deutsche Bank, UBS and the others “have not maintained or preserved the vast majority of these communications made outside official channels, in violation of securities laws”, explains the agency responsible for the Exchange, the SEC , which was paid $1.1 billion.
The agency responsible for regulating the futures markets, the CFTC, for its part announced separately that it had recovered 710 million dollars.
Institutions carrying out operations on the markets are in fact supposed to keep all communications relating to their activities.
However, employees have tended to increasingly use their own WhatsApp, Signal or email account to communicate with colleagues, especially during the pandemic.
The largest US bank by assets, JPMorgan Chase, had already agreed at the end of 2021, for similar reasons, to pay a penalty of $125 million to the SEC and another of $75 million to the CFTC.
The investigation at JPMorgan had led to the launch of investigations at other financial institutions.
A total of 16 establishments, including five subsidiaries, are therefore concerned on Tuesday.
Bank of America will pay $225 million. Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS meanwhile agreed to pay $200 million each.
Nomura, Jefferies and Cantor Fitzgerald will pay 100, 80 and 16 million respectively.
Financial authorities criticize these establishments for having let their employees, at all levels of the hierarchy, communicate frequently on matters relating to their work via their personal devices, without having put in place systems to store their messages.
Evolve with technology
By not keeping these exchanges, the establishments “probably deprived the SEC of these communications outside of official channels in various investigations”, underlines the agency.
“Some executives responsible for ensuring compliance with company policies and procedures have themselves used unapproved communication methods to communicate on company-related matters,” the CFTC notes.
The companies have acknowledged the facts. Several of them had already indicated that they were negotiating with the authorities and had set aside money to pay penalties.
They have also begun revising their compliance policies and procedures, the SEC says.
“In finance, everything is ultimately based on trust. By failing to meet their record-keeping and record-keeping obligations, the market participants we charge today failed to maintain that trust,” SEC Chairman Gary Gensler commented, as quoted in the press release.
These rules, in force since the 1930s, are “vital to preserve the integrity of the markets”, he recalled.
“As technology evolves, it is even more important that certified institutions communicate about their business only through official channels, and they must maintain and preserve these communications,” he added.