SEC, CFTC call for self-reporting to reduce off-channel comms backlash
The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have made it clear they are serious about violations of off-channel communications rules by issuing massive fines against some of the world’s largest banks and investment firms.
The wave of enforcement actions likely has not yet crested. But the regulators have indicated they will be more forgiving to firms that voluntarily self-report violations and take remedial actions before being asked to do so.
The list of institutions hit with significant penalties by the SEC and CFTC for “endemic failures” in compliance related to monitoring, recording, and retaining the business communications of employees reads like a who’s who of international finance. Bank of America/Merrill Lynch was fined $225 million in September 2022, along with Goldman Sachs, Barclays, Citi, Credit Suisse, Deutsche Bank, Morgan Stanley, and UBS. JPMorgan Chase was also fined $200 million in December 2021, while Wells Fargo equaled that total as part of a new wave of penalties announced Tuesday.