Nearly a dozen Wall Street banks including Goldman Sachs, Deutsche Bank and Bank of America are being fined a total of $710 million for not retaining better records of texts and messages from WhatsApp and Signal sent by its employees.
The Commodity Futures Trading Commission on Tuesday said it will fine 11 financial institutions fines ranging from $6 million to $100 million each for failing to maintain, preserve or produce records that employees sent to each other or to clients. Some of the messages were sent from personal devices for work communications.
Bank of America (BAC) was assessed the largest fine of $100 million while Cantor Fitzgerald's fee is only $6 million.
The CFTC said the civil monetary penalties were imposed because for many years the banks "failed to stop its employees, including those at senior levels, from communicating both internally and externally using unapproved communication methods, including messages sent via personal text, WhatsApp or Signal."
The financial institutions were required to keep these written communications because they related to the firms’ businesses as CFTC registrants.
These banks did not maintain and preserve these messages and were not able to provide them to the CFTC.
The Commission’s record keeping and supervision requirements ensure the safety and integrity of the U.S. derivatives markets and protect customers and market participants,” said Chairman Rostin Behnam. “As demonstrated today, the commission will vigorously pursue registrants who fail to comply with their core regulatory obligations and hold them accountable.”
The fines were assessed for the following banks:
- Bank of America: $100 million
- Barclays (BCS): $75 million
- Cantor Fitzgerald: $6 million
- Citi (C): $75 million
- Credit Suisse (CSGKF) : $75 million
- Deutsche Bank (DBOEF) : $75 million
- Goldman Sachs (GS): $75 million
- Jefferies: $30 million
- Morgan Stanley (MS): $75 million
- Nomura: $50 million
- UBS: $75 million
“Record keeping requirements are key to the commission’s oversight of registrants and a registrant’s disregard of its obligations threatens the commission’s ability to effectively and efficiently conduct examinations and investigations,” said Acting Director of Enforcement Gretchen Lowe. “The commission continues to focus on the importance of record keeping, supervision and other regulatory obligations. Registrants and other market participants subject to the federal commodities laws and regulations are encouraged to examine their own internal controls and supervision to ensure they are in compliance.”
The CFTC found "widespread use of unapproved communication methods" of the internal policies and procedures of the investment banks since they "generally prohibited business-related communication taking place via unapproved methods."
Supervisors and managers who were responsible for ensuring compliance also sent messages that were not approved.
