US fines 16 Wall Street firms $1.8 billion for discussing deals and brokering personal apps

US fines 16 Wall Street firms $1.8 billion for discussing deals and brokering personal apps

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

The broad industry investigation, first reported by Reuters last year and subsequently disclosed by multiple lenders, is a landmark case for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). , marking one of their greatest collective resolutions.

From January 2018 to September 2021, bank staff regularly communicated on business matters such as debt and capital agreements with colleagues, customers and other third-party advisors using applications on their personal devices such as SMS and WhatsApp, the agencies said.

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The institutions failed to preserve the majority of those personal conversations, violating federal rules that require brokers and other financial institutions to preserve business communications. This hampered the agencies’ ability to monitor financial markets, ensure compliance with key rules and gather evidence in other unrelated investigations, the agencies said.

Spokespeople for UBS, Morgan Stanley and Citi said the banks were pleased to have resolved the issue. 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 scale of the penalties imposed – underscore the importance of record-keeping requirements: they are sacrosanct. If there is has allegations of wrongdoing or misconduct, we need to be able to review a company’s books and records,” said Gurbir Grewal, director of the SEC’s Division of Enforcement.

The failures 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 neither admitted nor denied certain aspects of the findings of the CFTC investigation. , did he declare.

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


Wall Street banks have struggled for years to eradicate the use of personal devices at work – often banning them from trading floors altogether – but the problem became acute as bankers and traders worked from home during the pandemic.

According to CFTC Commissioner Christy Goldsmith Romero, staff used personal apps to evade surveillance, sometimes at the direction of senior executives who knew they were violating banking policies but wanted to obfuscate business communications.

In one example cited by his office, Bank of America staff used WhatsApp, with one trader writing, “We use WhatsApp all the time but regularly delete conversations.” A trading desk manager routinely ordered traders to delete messages on personal devices and use Signal, including during the CFTC investigation.

In another example, a Nomura trader deleted posts, which included incriminating statements about trading, after the CFTC sent a document preservation request, his office said.

“Those who choose to participate in US financial markets be warned: the era of evasive disclosure 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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