About two dozen brokerages and investment advisers, including TD, BNY, Truist and Royal Bank of Canada, have agreed to pay more than $470 million in penalties over their use of off-channel communications, two regulators announced Wednesday.
Considering the penalties from both countries, Securities and Exchange Commission TD received $30 million in damages from the SEC and the Commodity Futures Trading Commission, and an additional $16.5 million was paid to Cowen. I bought the TD last year.; $82 million from the CFTC.
The latter $82 million itself will be split into three fines. $75 million a failure to stop employees from communicating on unauthorized platforms in 2015, and a further $3 million fine for similar violations at Cowen; $4 million for failing to effectively track changes the vendor made to its automated tools that monitor communications between swap dealers;
“Communications oversight is a critical component of an effective supervisory system,” CFTC Enforcement Director Ian McGinley said in a statement. “Swap dealers not only need to have strong systems to detect and prevent market abuse and other misconduct, but they also need to be closely monitored to ensure that those systems are working properly.”
The statement said: The Globe and MailTD said it was working with regulators and “investing in technology and strengthening our electronic communications policies and procedures”.
“The bank adheres to the highest standards of integrity, ethics and compliance and works diligently to uphold and protect the interests of our clients, customers and colleagues,” the bank said.
Regulators have held up Truist as a model for cooperation. The Charlotte, North Carolina-based lender paid $5.5 million to the SEC. $3 million to the CFTC The company voluntarily reported violations to authorities and proactively investigated the use of unauthorized communication methods.
“Truist stood apart from more than 20 other registrants in addressing significant industry-wide issues,” McGinley said. “Truist’s decision to self-report, cooperate, remediate and take responsibility allowed it to benefit from a significantly reduced penalty. At the same time, the CFTC’s message is clear: recordkeeping and oversight requirements are fundamental, and registrants that fail to comply with these core obligations do so at their own peril.”
Truist did not immediately respond to a request for comment. Bloomberg.
Among the other banks fined on Wednesday, RBC will pay $45 million to the SEC. The Toronto-based bank said it was focused on meeting regulatory requirements and “continuing to enhance its compliance procedures,” according to Bloomberg.
BNY, meanwhile, will pay $40 million. The New York City-based bank told Bloomberg it “takes its regulatory responsibilities seriously and is pleased to have resolved this matter.”
The largest penalties levied by the SEC on Wednesday were imposed on nonbank companies: Edward Jones, Raymond James, Ameriprise and LPL will each pay $50 million.
At Piper Sandler, the division head sent “numerous” messages about its securities business to at least 20 colleagues and at least nine “outside securities industry parties” in 2021, according to the SEC. The firm will pay a $14 million fine.
“We remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and the smooth functioning of markets,” Gurbir Grewal, director of the SEC’s enforcement division, said Wednesday.
The SEC and CFTC have fined numerous financial institutions since 2021 after employees were found to have conducted business through personal messaging platforms such as WhatsApp, while regulators say the firms did not keep sufficient records of those communications.
Wednesday’s order marks at least the fifth penalty the SEC and CFTC have imposed against multiple banks. JPMorgan Chase In December 2021, regulators imposed a $200 million fine, of which $125 million was paid to the SEC and $75 million to the CFTC, which set the template for subsequent actions.
Citi, Goldman Sachs, Morgan StanleyUBS, Credit Suisse, Barclays and Deutsche Bank were also fined $200 million in September 2022, with the same 125-75 split between regulators. Bank of America was fined slightly more.
In successive rounds HSBC, Wells Fargo and Bank of America Shoot the penalty kick. And as time went on, Goals and fines — It’s getting smaller.
Industry advocacy groups have pushed back against regulators broadening the scope of their efforts to root out unapproved use of the platforms, saying the rules for asset managers are slightly different.
“We are deeply concerned that the SEC is exceeding its authority under the Advisers Act and engaging in mandatory rulemaking through its current investigation into off-channel communications,” the Investment Company Association said in a letter to the SEC. Financial Times.
