French bank Société Générale is the latest financial institution to be swept up in U.S. regulators’ crackdown on the use of personal cellphones and private apps by employees to conduct official business.
In its fourth-quarter financial statements published online Wednesday, the bank disclosed its U.S.-based investment bank and trading arm, SG Americas Securities, “received requests for information from the U.S. Securities and Exchange Commission (SEC) focused on compliance with record-keeping requirements in connection with business-related communications on messaging platforms that were not approved by the firm.”
The disclosure acknowledged the SEC has entered into settlements with other firms regarding the matter and that SG Americas Securities was cooperating with the investigation.
In September, the SEC and Commodity Futures Trading Commission (CFTC) combined to levy fines worth more than $1.8 billion on 11 banks, investment firms, and their affiliates for “widespread and longstanding failures” in monitoring, maintaining, and preserving electronic communications by employees. Among the firms caught in the sweep were Bank of America, Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and UBS.
The crackdown began in December 2021, when the SEC and CFTC combined to fine JPMorgan Chase $200 million regarding the matter.
Unauthorized communications by employes of financial institutions and the recordkeeping violations such actions cause appear to continue to be a priority for the SEC that shows no signs of slowing.
In November, three private equity firms—Apollo Global Management, The Carlyle Group, and KKR & Co.—disclosed they were under investigation by the agency for not properly recording and retaining the work-related communications of their employees made on mobile phone apps like WhatsApp and WeChat. The results of those probes have not been disclosed.
In a recent SEC report on nationally recognized statistical rating organizations, the agency said examiners found two firms whose employees used off-channel communications to conduct company business.
Morgan Stanley, which was ordered to pay $200 million by the SEC and CFTC in September, reportedly fined its own employees up to $1 million for using unauthorized communication channels in violation of federal securities rules and the firm’s own internal policies.
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