A unit of HSBC and Canada’s Bank of Nova Scotia have been handed civil penalties by US regulators for recordkeeping violations through their staff’s usage of personal devices and apps for work communications.
Both banks admitted that they failed to meet recordkeeping requirements for dealers registered in the US, and agreed to pay fines.
The HSBC unit, HSBC Securities, will pay $15 million to settle the charges brought by the US Securities and Exchange Commission (SEC). Scotiabank meanwhile will pay $7.5 million to the SEC and a further $15 million to settle US Commodity Futures Trading Commission (CTFC) charges.
The CTFC investigation found that Scotiabank employees were using off-channel communication methods, while SEC investigators noted "pervasive and longstanding use of off-channel communications" at both companies.
A spokesperson for HSBC said: "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 organisation.”
A Scotiabank spokesperson also commented: "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."
The news comes in the wake of the $1.8 billion in fines handed to more than a dozen banks including Bank of America, Citi and Goldman Sachs for their employees’ use of non-authorised messaging services like WhatsApp to conduct bank business.
Regulators have increased their scrutiny over bankers’ use of personal devices and third-party messaging apps, as their ability to obfuscate record maintenance can impact oversight at the organisations in event of potential wrongdoing such as insider trades.
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