US Regulators Fine Wells Fargo and 10 Firms for Record-Keeping Failure
The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have imposed a $549 million fine on Wells Fargo and 10 other firms for a widespread failure in record-keeping. The SEC found that the firms violated securities laws by not maintaining proper electronic communications. The investigation revealed that employees used iMessage, WhatsApp, and Signal to communicate about their employers’ business, with a majority of these communications going unrecorded. The CFTC also brought charges against several firms, including BNP Paribas and Société Générale, with separate fines. Compliance with record-keeping provisions is crucial for investor protection and well-functioning markets, according to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Key Points:
- US regulators have fined Wells Fargo and 10 other firms a total of $549 million for a record-keeping failure.
- The firms failed to maintain proper electronic communications, violating securities laws.
- Employees used iMessage, WhatsApp, and Signal to communicate about their employers’ business.
- A majority of these communications were not recorded, in violation of federal securities laws.
- The fines are the latest in a series being paid by legacy financial institutions.
Hot Take:
This fine serves as a reminder to financial firms about the importance of compliance with record-keeping provisions. The use of unrecorded electronic communications poses significant risks and undermines investor protection. It is crucial for firms to self-report, cooperate, and remediate to avoid regulatory actions. These fines reflect the regulators’ commitment to enforcing securities laws and holding firms accountable for their actions. Financial institutions must prioritize compliance and implement robust policies and procedures to maintain the integrity of the markets and protect investors.
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