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Eleven Wall Street banks and brokers including Goldman Sachs, Morgan Stanley and Barclays have agreed to pay more than $1.8bn in fines over charges of “widespread” and “longstanding” failures in their record-keeping practices, US regulators said on Tuesday.
The institutions admitted to violating federal record-keeping requirements, the US Securities and Exchange Commission said after an investigation uncovered “pervasive off-channel communications”.
The SEC said the violations occurred from January 2018 to September 2021 and involved staff at different levels of seniority, including executives and supervisors discussing business issues via text message on their personal devices.
The investigation, which became public last year, has shaken Wall Street, costing some bankers their jobs and pushed lenders to crack down on unauthorised use of messaging apps such as WhatsApp and Signal.
Gary Gensler, SEC chair, said: “Finance, ultimately, depends on trust. By failing to honour their record-keeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust.”
The 11 institutions agreed to pay more than $1.1bn in penalties levied by the SEC and more than $710mn to settle similar charges involving their swap dealers and futures brokers brought by the Commodity Futures Trading Commission, the US derivatives regulator.
The SEC said the groups admitted to wrongdoing, though Bank of America and Nomura neither admitted nor denied certain findings of the CFTC.
Gretchen Lowe, the CFTC’s acting director of enforcement, said: “A registrant’s disregard of its obligations threatens the commission’s ability to effectively and efficiently conduct examinations and investigations.”
Bank of America, Credit Suisse, Goldman, Nomura and Barclays declined to comment beyond the SEC and CFTC statements. Morgan Stanley, Citi and UBS said they were “pleased” to have resolved the matter. The others did not immediately respond to requests for comment.
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