US Banks Paying $470,000,000 To Regulators Over Widespread Recordkeeping Failures and ‘Off-Channel’ Communication Methods

More than two dozen Wall Street firms including Bank of New York Mellon and Truist have agreed to pay a massive collective fine to US regulators.

The financial companies are handing over $470 million to the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to settle charges that the firms failed to follow record-keeping rules.

According to the SEC, the firms have admitted to using “off-channel” work communications in violation of federal securities laws.

“The failure to maintain and preserve required records deprives the SEC of these communications in its investigations.” 

BNY Mellon agreed to pay $40 million to the SEC while Truist is set to deliver $5 million to the SEC and $3 million to the CFTC.

Financial services firms Ameriprise Financial Services, Edward D. Jones & Co, LPL Financial and Raymond James & Associates have all agreed to pay $50 million each to the SEC. 

Meanwhile, Toronto Dominion (TD) Bank has agreed to pay $75 million to the CFTC. In addition, TD Bank-owned Cowen and Company will settle $3 million in penalties to the CFTC.

Other firms paying penalties to US regulators for record-keeping violations include the Royal Bank of Canada (RBC) Capital Markets, Osaic Services, Piper Sandler & Co, First Trust Portfolios, Apex Clearing Corporation, Cetera Advisor Networks, Great Point Capital, Hilltop Securities, P. Schoenfeld Asset Management and Haitong International Securities (USA).

According to the SEC, some of the firms made an effort to self-report their record-keeping breaches, resulting in significantly lower civil penalties.

Says Gurbir S. Grewal, Director of the SEC’s Division of Enforcement,

“We remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and well-functioning markets.

Among this group of firms, there are several that differentiated themselves by self-reporting prior to the staff’s investigation, demonstrating once again the real benefits of proactive cooperation.”

 

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