Bankers texting away on their personal phones are costing the biggest banks on Wall Street a chunk of money.
On Tuesday, two U.S. regulators announced $1.8 billion in penalties to be paid by financial institutions including Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS) over staff usage of personal devices to discuss work-related matters, a violation of recordkeeping provisions of federal securities laws.
“From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices,” SEC Chair Gary Gensler said in a statement. “The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.”
The Securities and Exchange Commission’s (SEC) penalty totaled $1.1 billion across 15 broker-dealers: Barclays Capital (BCS), Bank of America, Citigroup (C), Credit Suisse (CS), Deutsche Bank, Goldman Sachs, Morgan Stanley, UBS Securities, Jefferies, Nomura Securities, and Cantor Fitzgerald. The Commodity Futures Trading Commission (CFTC) charged 11 institutions a collective $710 million fine.
“Finance, ultimately, depends on trust,” Gensler added. “By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust.”
The industry has more broadly been scrutinized in recent years over which platforms are used by employees to discuss items related to trades and investments. Last year, JPMorgan Chase drew attention to unscrupulous personal device use after the bank paid a $125 million SEC fine after “widespread and longstanding failures” to safeguard employee communications, who were using WhatsApp, email, and text to discuss securities-related matters.
“We fully cooperated with our regulators on this industry-wide matter,” a Deutsche Bank spokesperson told Yahoo Finance. “We have proactively deployed fully compliant and convenient text and chat platforms and will continue to scale these technologies to meet the expectations of our regulators and our clients.”
Bank of America and Barclays declined to comment on the matter. Other entities cited in the regulatory orders did not respond to requests for comment before publication.
“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,” the SEC’s Gensler stated.
In the SEC’s charges, eight firms and of their five subsidiaries agreed to pay fines of $125 million each: Barclays Capital, BofA Securities together with Merrill Lynch, Pierce, Fenner & Smith, Citigroup Global Markets Inc., Credit Suisse Securities, Deutsche Bank Securities together with DWS Distributors and DWS Investment Management Americas, Goldman Sachs, Morgan Stanley together with Morgan Stanley Smith Barney, and UBS Securities together with UBS Financial Services.
Jefferies and Nomura Securities International settled on fines of $50 million each, while Cantor Fitzgerald paid out $10 million.
To settle with the CFTC, Bank of America shelled out $100 million, the largest sum; Barclays, $75 million; Cantor Fitzgerald $6 million; Citi, $75 million; Credit Suisse $75 million; Deutsche Bank, $75 million; Goldman Sachs, $75 million; Jefferies, $30 million; Morgan Stanley, $75 million; Nomura, $50 million; and UBS, $75 million.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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Source: https://finance.yahoo.com/news/wall-street-fine-over-staffers-personal-device-use-210529181.html