: Big banks to pay nearly $2 billion for ‘widespread and longstanding failures’ in keeping text-message records

by | Sep 27, 2022 | Stock Market

Nearly a dozen financial institutions agreed to pay more than $1.8 billion collectively for failing to properly collect employees’ text messages for their records, the Securities and Exchange Commission and Commodity Futures Trading Commission announced Tuesday. Eight banks agreed to pay $125 million apiece regarding the SEC charges, joining JP Morgan Chase & Co.
which agreed to pay the same amount late last year, establishing a record at the time for fines related to record-keeping. Two other firms agreed to pay $50 million apiece, and one agreed to a $10 million penalty, adding up to more than $1.1 billion, the SEC disclosed.

“Today’s actions — both in terms of the firms involved and the size of the penalties ordered — underscore the importance of record-keeping requirements: they’re sacrosanct,” the director of the SEC’s enforcement division, Gurbir Grewal, said in a statement. “If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records to determine what happened.” In addition, the CFTC announced that the banks agreed to pay more than $700 million in penalties to that regulator. In a statement, CFTC Commissioner Kristin Johnson described the failures as “egregious and widespread,” similar to the SEC’s description of “widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.” “Increased reliance on simple, easy-to-access but unauthorized chat and text platforms will pose a significant challenge for many types of entities operating in our markets,” Johnson said in her statement. “Internal compliance programs must adopt internal controls consistent with this new landscape. Firms must inculcate a culture of compliance at all levels of their organization to mitigate the risks associated with using un …

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