Goldman Sachs, Citigroup and other financial giants have agreed to pay regulators $1.1 billion in penalties for not monitoring employees using unauthorized messaging apps, according to a press release from the Securities and Exchange Commission (SEC) on Tuesday (Sept. 27).
Bank of America and Morgan Stanley are among the other firms, 16 in total, that settled with the SEC, the release said.
The SEC says it found “pervasive” off-channel communications, including reported instances of employees talking often about “business matters” through texts on personal devices.
“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said SEC Chair Gary Gensler. “Since the 1930s, such recordkeeping has been vital to preserve market integrity. 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. As part of our examinations and enforcement work, we will continue to ensure compliance with these laws.”
Finance firms have to closely watch staffers’ communications to prevent improper conduct, according to a report from Bloomberg.
The system has already been strained by the development of mobile-messaging software like WhatsApp, which grew even more as workers were sent home in 2020 during the pandemic.
Eight firms with five affiliates were fined $125 million each: Barclays Capital Inc.; BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.; Citigroup Global Markets Inc.; Credit Suisse Securities (USA) LLC; Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.; Goldman Sachs & Co. LLC; Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC; and UBS Securities LLC together with UBS Financial Services Inc.
Two firms will pay $50 million each: Jefferies LLC; and Nomura Securities International, Inc. Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.
Read more: Report: SEC Accounting Guidance Creates Hurdle for Banks’ Crypto Plans
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