Wells Fargo & Co. (WFC) and BNP Paribas SA are among several firms set to pay substantial penalties for employees using informal communication channels, such as WhatsApp, to conduct official business. This comes as part of the ongoing scrutiny by US regulators to ensure Wall Street firms adhere to communication record-keeping regulations. Wells Fargo has agreed to pay the Securities and Exchange Commission (SEC) $125 million, while BNP will part with $35 million. Both lenders are also expected to pay the Commodity Futures Trading Commission (CFTC) $75 million each for similar violations linked to their derivatives brokerage arms.
The total fines declared by the CFTC amount to $260 million, while the SEC revealed that firms had collectively consented to pay $289 million. This is part of a broader regulatory clampdown, with the SEC and CFTC working diligently over the years to penalize firms evading regulatory oversight by employing unofficial communication platforms or personal email addresses for professional discussions. The stringent requirements mandate financial firms to meticulously oversee all business-related communication to deter any illicit activities.
The SEC, in its probe, found widespread and persistent usage of "off-channel communications" at 11 firms. These firms acknowledged in their settlements that their employees had used messaging platforms like iMessage, WhatsApp, and Signal for business conversations, without maintaining the necessary archives. The CFTC confirmed that it had identified analogous breaches during its investigation.
This recent wave of actions isn't isolated. Last September, the SEC declared fines amounting to $1.1 billion against renowned establishments like Bank of America Corp., Citigroup Inc., and Goldman Sachs Group Inc. Concurrently, the CFTC stated that firms had agreed to pay penalties summing up to $710 million for similar violations.
