HomeTechnologyGadgetsU.S. fines 16 Wall Street firms $1.8 bln for talking deals, trades...

U.S. fines 16 Wall Street firms $1.8 bln for talking deals, trades on personal apps

Sept. 27 (Reuters) – US regulators fined 16 financial companies on Tuesday, including Barclays (BARC.L)Bank of America , Citigroup , Credit Suisse (CSGN.S)Goldman Sachs, Morgan Stanley and UBS (UBSG.S)a combined $1.8 billion after employees discussed deals and transactions on their personal devices and apps.

The sweeping industry analysis, first reported last year by Reuters and subsequently disclosed by multiple lenders, is a landmark for the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), one of their largest corporate resolutions.

From January 2018 to September 2021, the banks’ staff routinely communicated on business matters such as debt and equity transactions with colleagues, customers and other outside advisors using applications on their personal devices, such as text messages and WhatsApp, the agencies said.

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The institutions have failed to keep most of those personal chats and have broken federal rules requiring broker-dealers and other financial institutions to keep business communications. That hampered the agencies’ ability to monitor financial markets, ensure compliance with key rules and gather evidence in other, unrelated investigations, the agencies said.

Spokespersons for UBS, Morgan Stanley and Citi said the banks were pleased to have resolved the matter. Bank of America, Barclays, Goldman Sachs, Nomura and Credit Suisse declined to comment.

“Today’s actions – both in terms of the companies involved and the amount of fines imposed – underline the importance of record-keeping requirements: they are sacred. If there are allegations of misconduct or misconduct, we must open the books of a company can investigate and records,” said Gurbir Grewal, director of the SEC’s Enforcement Division.

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The deficiencies occurred at all 16 companies and involved employees at multiple levels, including senior and junior investment bankers and traders, the SEC said.

In a major victory for the agencies, the institutions admitted the facts and acknowledged that they violated federal laws, although Bank of America and Nomura did not admit or deny aspects of the CFTC’s investigation findings, it said.

The institutions, which cooperated with the investigation, have begun to make improvements in their compliance policies and procedures, the SEC said.


Banks on Wall Street have struggled for years to ban the use of personal devices at work — often by banning them from trading floors altogether — but the problem became acute when bankers and traders were working from home during the pandemic.

According to CFTC Commissioner Christy Goldsmith Romero, employees used personal apps to evade surveillance, sometimes at the direction of senior executives who knew they were violating banking policy but wanted to cover up trade communications.

In an example cited by her office, Bank of America employees used WhatsApp, with one merchant writing, “We use WhatsApp all the time, but we delete convos regularly.” The head of a trading desk routinely instructed traders to delete messages on personal devices and use Signal, including during the CFTC’s investigation.

In another example, a Nomura trader deleted messages containing incriminating statements about trading after the CFTC sent a request to hold documents, her office said.

“Those who choose to participate in US financial markets know that the era of evasive communication practices is over,” Goldsmith Romero said in a statement.

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Reporting by Eric Beech and Michelle Price in Washington; additional reporting by Pete Schroeder, Saeed Azhar and Lananh Nguyen; Editing by Caitlin Webber, Lisa Shumaker, Aurora Ellis and Richard Chang

Our standards: The Thomson Reuters Trust Principles.



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