- U.S. regulators fine Wells Fargo and other firms a total of $549 million for failing to keep electronic records.
- The crackdown involves the widespread misuse of messaging apps like WhatsApp, leading to record-keeping violations.
- Apart from fines, banks are ordered to cease future violations and review policies, highlighting the urgency of compliance.
On Tuesday, U.S. financial watchdogs unleashed hefty fines of $549 million on Wells Fargo and several smaller and non-U.S. companies for neglecting to maintain essential electronic communication records. These blunders have sent shockwaves across Wall Street.
The Securities and Exchange Commission (SEC) targeted 11 firms with $289 million in fines for chronic failures in record-keeping, while the Commodity Futures Trading Commission (CFTC) imposed fines of $260 million on four banks. These fines are part of a broader crackdown against the improper use of secure messaging apps like Signal, WhatsApp, and iMessage by financial professionals, with total penalties now exceeding $2 billion.
"Today's fines are a result of our ongoing efforts to ensure that financial institutions follow record-keeping laws, vital for monitoring and enforcing compliance with federal regulations," declared Sanjay Wadhwa, the SEC's deputy director of enforcement. As revealed, employees from at least 2019 have been found to be discussing company affairs over WhatsApp and similar platforms, leading to breaches of federal laws.
Wells Fargo led the charge in fines, with penalties amounting to $200 million. Other banks like BNP Paribas, Societe Generale, and the Bank of Montreal also faced significant fines. In addition to the penalties, banks were instructed to stop future violations and engage consultants to evaluate their policies.
Wall Street has often relied on automated recording of official communications to ensure fair dealings with clients. However, recent scandals pivoting on incriminating chatroom messages have led many to utilize unofficial channels, creating a pervasive practice. Regulators discovered that even at Wells Fargo, where enforcement should have been strictest, both managers and employees were guilty of this practice, leaving regulators no choice but to respond with force.
WOM Money Picks
Be a part of the winning team | 81% Success Rate.