- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2022-09-28T18:39:00
In an enforcement sweep against off-channel electronic communications at financial institutions regulators warned was coming, 11 banks, investment firms, and their affiliates will pay a total of more than $1.8 billion in fines for “widespread and longstanding failures” in monitoring, maintaining, and preserving electronic communications by employees.
The Securities and Exchange Commission (SEC) fined the firms more than $1.1 billion total, while the Commodity Futures Trading Commission (CFTC) levied another $711 million in penalties Tuesday. The agencies concluded that, collectively, the firms did not reign in off-channel communications by employees from 2018-21.
Specifically, the two regulators found systemic use of off-channel electronic communications by company employees on business-related topics conducted on personal cell phones, messaging apps, and other channels. These messages were not captured, recorded, and stored by the firms, as required by the SEC’s and CFTC’s recordkeeping, books and records, and supervision requirements for market participants.
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A lack of supervision and internal controls at Morgan Stanley Smith Barney allowed four of its investment advisers to steal millions from customers before the behavior was detected, the SEC said in charging the firm.
The Securities and Exchange Commission and Commodity Futures Trading Commission have combined to levy nearly $3.5 billion in penalties (so far) against firms and their affiliates in response to recordkeeping failures regarding employee use of off-channel communications for business purposes.
The Securities and Exchange Commission and Commodity Futures Trading Commission have indicated they will be more forgiving to financial services firms that voluntarily self-report recordkeeping violations and take remedial actions before being asked to do so.
USAA Federal Savings Bank has been hit with its third cease and desist order from the Treasury Department’s Office of the Comptroller of the Currency in the past five years for failing to correct unsafe and unsound banking practices.
Becton Dickinson medical device company will pay $175 million for “repeatedly” misleading investors about its Alaris infusion pump, a product the company knew was flawed and was sold without the required patient-safety approvals, the Securities and Exchange Commission said.
The Securities and Exchange Commission charged bankrupt fashion retailer Express with failing to disclose nearly $1 million in perks to a former chief executive, but did not levy a financial penalty thanks to its cooperation, the SEC said.
