Dive Brief:
- Wells Fargo has agreed to pay $125 million to the Securities and Exchange Commission to settle allegations the bank used unapproved electronic messaging channels like WhatsApp for business communications, the SEC said Tuesday.
- The San Francisco-based lender is one of 11 firms — including BNP Paribas, BMO, Mizuho and Societe Generale — that reached settlements with the SEC on Tuesday, as U.S. regulators continue their crackdown on corporate record-keeping failures.
- In separate settlements also announced Tuesday, Wells Fargo will pay $75 million to the Commodity Futures Trading Commission over similar violations by its swap dealer and futures commission merchant affiliates.
Dive Insight:
Eleven firms agreed to pay combined penalties of $289 million to the SEC, while four agreed to pay a total of $260 million to the CFTC for failures to maintain and preserve electronic communications, according to the regulators.
Tuesday’s settlements mean the SEC has brought 30 enforcement actions and ordered more than $1.5 billion in penalties tied to the personal-device misuse scandal since 2021, Gurbir Grewal, director of the agency’s Division of Enforcement, said in a statement.
“[H]ere are three takeaways for those firms who haven’t yet done so: self-report, cooperate and remediate,” Grewal said Tuesday. “If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling.”
The SEC uncovered pervasive and longstanding “off-channel” communications at all 11 firms identified Tuesday, it said.
From at least 2019, employees often communicated through messaging platforms on their personal devices, including iMessage, WhatsApp and Signal, about the business of their employers, the firms admitted, according to the SEC.
The firms did not maintain or preserve the bulk of the off-channel communications, in violation of federal securities laws, the agency said.
“Recordkeeping failures such as those here undermine our ability to exercise effective regulatory oversight, often at the expense of investors,” Sanjay Wadhwa, the SEC’s deputy director of enforcement, said in a statement.
Wells Fargo took the largest penalties of any bank that was included in Tuesday’s round of settlements. It’s also the last of the six largest U.S. banks to face regulatory action in the personal-device misuse probes. Wells warned investors in March that regulators were investigating, and updated investors last week, saying it was in “resolution discussions” with the agencies.
As part of Tuesday’s settlements, BNP Paribas and Societe Generale each agreed to pay the SEC $35 million, alongside a separate $75 million to the CFTC.
BMO will pay $25 million to the SEC and $35 million to the CFTC.
Mizuho will pay $25 million to the SEC; Houlihan Lokey will pay $15 million; Moelis & Co. and Wedbush Securities will pay $10 million each; and Sumitomo Mitsui will pay $9 million.
The SEC and CFTC’s crackdown on employees’ use of unapproved channels accelerated in December 2021, when JPMorgan Chase agreed to pay a $125 million penalty to the SEC and another $75 million to the CFTC over failures to maintain and preserve written communications.
Penalties continued last September when the regulators fined 11 Wall Street banks and brokerages more than $1.8 billion. Bank of America took the highest penalty from that round of settlements, at $225 million — $125 million to the SEC, and $100 million to the CFTC.
Seven other banks — Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS — saw fines of $200 million each, with $75 million going to the CFTC in each case.
