Author: SteelEye
11 May 2023
The SEC’s probe into the unmonitored use of communications channels has identified new tier-one banks guilty of record keeping failures, with two firms being fined today for their shortcomings around off-channel communications.
Two more tier-one banks have been penalized by the Securities and Exchange Commission (SEC) for record keeping failures, with the fines of $15 million and $7.5 million, respectively. Both firms were cited for widespread and longstanding failures by their employees to maintain and preserve electronic communications in accordance with regulations. To settle the charges, the banks acknowledged that their conduct violated record keeping provisions of the federal securities laws and agreed to pay penalties that totaled over $22 million.
Both firms stated their employees had often communicated “off-channel” when discussing business matters on their personal devices. The illicit behavior ranged across multiple levels of seniority, with supervisors and senior executives at the two firms being cited as guilty parties. Similar to previous cases in recent months, WhatsApp was identified as one of the primary messaging platforms for the guilty parties.
The increased crackdown by the SEC should come as no surprise to those who have followed recent actions on this topic. In 2022, the SEC handed out a record number of fines to financial firms that totaled $6.4 billion. A sizeable portion of the fines was tied to large tier-one banks, specifically related to their use of unmonitored messaging platforms like WhatsApp.
At the start of 2023, the SEC expanded its probe into unauthorized communications to mid-size hedge funds and announced it would be requesting a number of firms to hand over personal mobile devices belonging to certain employees.
Many interpreted the shift in attention from tier-one banks to hedge funds as an indicator that the SEC had made its point clear to larger organizations and would begin working its way down to smaller firms guilty of the same behavior. However, the announcement today that tier-one banks are again being scrutinized should be an indication that, at this point, no financial service firms guilty of record keeping failures are safe from the SEC’s watch.
Learn more about the SEC fines here >
About SteelEye
SteelEye simplifies compliance for financial firms and saves them time and money. SteelEye’s integrated platform allows firms to achieve ROI from communications and trades Record keeping, Oversight, and Intelligence.
With SteelEye, firms can easily lock their data in a WORM-compliant vault, identify and stop early warning signs of harmful conduct, and demonstrate that they have watertight policies, procedures, and controls.
By connecting large volumes of data from multiple sources, SteelEye enables firms to meet regulatory obligations more quickly, efficiently, and accurately than any other solution. Firms also gain full visibility and control of their trading and compliance operations, with cutting-edge analytics that provide timely insights on risks and opportunities.
Holistic Surveillance | Trade Surveillance | Communications & eComms Surveillance
Record Keeping | Best Execution & Transaction Cost Analysis | MiFIR Transaction Reporting
LOCATIONS
United Kingdom - 5th Floor, 55 Strand, London, WC2N 5LR
United States - 600 Fifth Avenue, New York, NY 10020
India - No. 613, 12th Main, HAL 2nd Stage, Bangalore - 560008
Portugal - Av. da Liberdade 615 1º, 4710-251 Braga
STEELEYE LIMITED, A COMPANY REGISTERED IN ENGLAND AND WALES WITH COMPANY NUMBER: 10581067, VAT NUMBER: 260818307 AND REGISTERED ADDRESS AT 55 STRAND, LONDON, WC2N 5LR.