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The Securities and Exchange Commission has taken action against almost a dozen major banks for their violation of record-keeping laws. These banks engaged in business transactions through messaging apps such as WhatsApp, which is outside the scope of official communication channels. The SEC charges were filed due to these banks’ failure to keep records of their unofficial communications. The banks involved include Wells Fargo and BNP Paribas. A photo taken by Hayoung Ieon/EPA-EFE is displayed above.
Aug. 8 (UPI) — The Securities and Exchange Commission announced on Tuesday that Wells Fargo will bear the brunt of a $289 million penalty for violating record-keeping regulations. This violation relates to the use of messaging platforms like WhatsApp by employees. In addition to Wells Fargo, nine other companies, including BNP Paribas, have also been charged with widespread and long-standing failures regarding unofficial communications used for official business.
Wells Fargo has agreed to pay the majority of the penalties, amounting to $125 million, while BNP Paribas will pay a penalty of $35 million. All firms involved have admitted to the charges brought against them by the SEC and acknowledged the violation of federal securities law. According to the SEC, the use of messaging apps for unofficial communication has been widespread, with firms confessing to using personal devices for such purposes since 2019. The SEC has emphasized the importance of compliance as a means of protecting investors and has ordered penalties totaling $1.5 million thus far to convey this message.
The director of the SEC’s enforcement division, Gurbir Grewal, stated that while some broker-dealers and investment advisers have responded to the agency’s message by self-reporting violations or improving internal policies and procedures, today’s actions are a reminder that many have not taken the necessary steps. The SEC has charged the firms with violating the record-keeping provisions of the Securities Exchange Act of 1934. In addition to paying penalties, the firms have agreed to employ independent consultants to review their practices for retaining records of electronic communication.
This is not the first instance of Wells Fargo facing legal consequences this year. The bank previously agreed to pay $1 billion to settle a class-action lawsuit surrounding a fake accounts scandal that occurred nearly a decade ago. In the lawsuit, plaintiffs accused Wells Fargo executives of misleading investors by claiming that regulators were satisfied with the bank’s progress under federal consent orders. However, a House Financial Services Committee report in March 2020 revealed that Wells Fargo was not in compliance with these orders.
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