Four Wall Street firms fined $260 Million by CFTC for communication recordkeeping breeches
August 08, 2023 - The Commodity Futures Trading Commission (CFTC) has ordered four major financial institutions to pay a total of $260 million in fines for their failure to adhere to the CFTC's mandated recordkeeping and supervision guidelines.
The institutions in question, BNP Paribas, Société Générale, Wells Fargo, and Bank of Montreal, have been reprimanded for their employees'—spanning from junior roles to senior executives—use of unapproved communication methods, such as personal texts or WhatsApp, for official correspondences. Such communications are required to be preserved, as they pertain to the business activities of the institutions registered under CFTC. Not only were these communications not archived, but the firms could not provide them to the CFTC upon request.
The breakdown of the penalties are as follows:
- BNP Paribas: $75 million
- Société Générale: $75 million
- Wells Fargo: $75 million
- Bank of Montreal: $35 million
“With today’s actions, the CFTC has now brought enforcement actions against 18 financial institutions, and imposed over $1 billion in penalties, for violations of the CFTC’s recordkeeping and supervision requirements involving the use of unapproved communication methods,” said Director of Enforcement Ian McGinley. “The Commission’s message could not be more clear—recordkeeping and supervision requirements are fundamental, and registrants that fail to comply with these core regulatory obligations do so at their own peril.”
This isn't the first time the CFTC has taken action against large financial firms. Since December 2021, $1.091 billion in fines has been imposed on 18 financial institutions for similar infractions.
In a parallel move, the Securities and Exchange Commission (SEC) also declared orders to settle charges against 11 Wall Street firms (including the firms mentioned here targeted by the CFTC) for similar recordkeeping and supervision breaches related to the use of unauthorized communication methods.
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