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SEC Fines Big Banks $500 Million for Using Private Messaging Apps

The Securities and Exchange Commission (SEC) has imposed a $500 million fine on several big banks for utilizing private messaging apps to communicate. Wells Fargo, along with other banks, has been fined a total of $549 million due to employees using apps like iMessage, WhatsApp, and Signal.

The SEC has cited the law that mandates publicly traded companies to maintain auditable records of all business decisions and discussions. Similarly, the Commodity Futures Trading Commission (CFTC) also requires companies to have an auditable record of trading decisions. Unfortunately, employees of these banks broke these rules engaging in business-related discussions on the aforementioned messaging apps.

What makes this situation particularly concerning is that the employees used their personal phones for these discussions. As a result, there is no official record of these conversations taking place, or access to these conversations is limited to the personal accounts of the individuals involved.

The following banks have been fined the SEC: Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, Wells Fargo Advisors Financial Network, LLC (paying $125 million penalty); BNP Paribas Securities Corp., SG Americas Securities, LLC (each paying $35 million penalty); BMO Capital Markets Corp., Mizuho Securities USA LLC (each paying $25 million penalty); Houlihan Lokey Capital, Inc. (paying $15 million penalty); Moelis & Company LLC, Wedbush Securities Inc. (each paying $10 million penalty); and SMBC Nikko Securities America Inc. (paying a $9 million penalty).

Additionally, the CFTC has fined the following banks: BNP Paribas S.A., BNP Paribas Securities Corp. ($75 million); Société Générale SA, SG Americas Securities, LLC ($75 million); Wells Fargo Bank NA, Wells Fargo Securities LLC ($75 million); Bank of Montreal ($35 million).

This significant fine serves as a reminder to companies to prioritize compliance with regulations regarding communication and record-keeping, ensuring transparency and accountability in their operations.