U.S. regulators on Thursday slapped units of Bank of Nova Scotia and HSBC Holdings Plc with civil penalties for widespread recordkeeping violations through employees' use of personal devices and apps for work communications.
"In recent years, we have made significant investments in enhancing our compliance procedures and have worked diligently to maintain the highest standards for professional conduct throughout our organization," an HSBC spokesperson said.
A Scotiabank spokesperson said, "We are committed to conducting our business according to the most current high standards of business conduct and adhering to all regulatory requirements, including the use of approved communication channels for business purposes." During its investigation, CFTC learned Scotiabank employees, including senior staff, were using off-channel communications such as text messages and WhatsApp, according to the agency's order.
SEC investigators uncovered "pervasive and longstanding use of off-channel communications" at both companies. Both banks notified SEC's enforcement staff of the issues and had begun to remediate them, the agency said in its order. Brokers, swaps dealers and investment advisers registered with the agencies have recordkeeping requirements. Regulators have grown increasingly concerned about dealers' use of personal devices, saying that failure to maintain records can thwart oversight and investigations into potential wrongdoing.
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