U.S. regulators on Thursday slapped units of Bank of Nova Scotia and HSBC Holdings with civil penalties for widespread recordkeeping violations through employees’ use of personal devices and apps for work communications.
HSBC Securities Inc and Scotia Capital, registered brokers with the U.S. Securities and Exchange Commission (SEC), have agreed to pay $15 million and $7.5 million, respectively, to settle SEC charges, the regulator said in a statement.
Scotiabank and Scotia Capital, registered dealers with the U.S. Commodity Futures Trading Commission, also agreed to pay $15 million to the CFTC for related charges, according to a separate statement.
HSBC and Scotiabank are the latest Wall Street companies to face penalties for employees’ use of personal devices and messaging apps since regulators launched a broad probe into use of such platforms in 2021. More than a dozen banks agreed to pay a total of $1.8 billion for such violations in September.
Representatives for HSBC and Scotiabank, which admitted to the violations, did not respond immediately to requests for comment.
During its investigation, CFTC staff learned Scotiabank staff were using such “off-channel communications” such as text messages and WhatsApp, according to the agency’s order.
SEC investigators uncovered “pervasive and longstanding use of off-channel communications” at both companies. Both companies notified SEC’s enforcement staff of the issues and had begun to remediate them, the agency said in its order.
Brokers, swaps dealers and investment advisers registered with the agencies have recordkeeping requirements. Regulators have grown increasingly concerned about dealers’ use of personal devices, noting that failure to maintain proper records can thwart oversight and investigations into potential wrongdoing.
Source : Reuters
