According to the information, banks such as Bank of America, Barclays, Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS Group will each pay $200 million and institutions such as Jefferies and Nomura will pay slightly less. The supervisory authorities SEC and CFTC want to make the agreement public by September 30th.
Authorities had previously investigated how the institute’s traders and brokers used encrypted apps like WhatsApp to discuss investment terms, client meetings and other deals. SEC and CFTC regulations require brokerage firms to retain and monitor the written communications of their employees to provide evidence to regulators who monitor compliance with investor protection laws. Services like WhatsApp and Signal prioritize privacy and can be set to automatically delete messages after a certain number of days or after a chat is read.
Dealers and brokers are not allowed to use such products to conduct their business. This practice became more common – and more difficult to detect – during the early stages of the coronavirus pandemic, as employees transitioned to working exclusively from home.
Regulators and compliance professionals also feared that allowing a bank’s operations to be run on personal and corporate devices increases the risk that hackers will find a way to steal lucrative trade secrets, said Mark Berman, a regulatory advisor at Compliglobe.
Fines in excess of $100 million are outliers in both the Democratic and Republican governments. In fiscal 2020, the last full year of the Trump administration, the median fines imposed were $194,000. The record-keeping initiative is unlikely to end at the big banks, some respondents said, as the SEC now investigates whether regulated money managers have violated the same rules.
By Dave Michaels
WASHINGTON (Dow Jones)
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