U.S. securities and derivatives regulators are sanctioning Scotiabank and its subsidiary, Scotia Capital USA Inc., for long-running record-keeping failures stemming from its employees’ use of unapproved communications methods.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) imposed US$15 million penalties on the firms.
Among other things, the regulators’ orders found the firms failed to prevent employees, including senior employees and compliance personnel, from using unapproved communications methods such as WhatsApp, and failed to keep records of these communications. This activity also violated the bank’s own policies, they noted.
“Adhering to the commission’s recordkeeping and supervision requirements is not optional,” said CFTC director of enforcement, Ian McGinley, in a release.
At the same time, the SEC also settled similar charges against HSBC Securities (USA) Inc., which agreed to pay a US$7.5 million penalty.
The firms all admitted the allegations, cooperated with the regulators’ investigations, and self-reported violations.
“Today’s actions should not only remind firms of the importance of following SEC recordkeeping requirements, but also the value of disclosing violations when they do occur,” said Gurbir Grewal, director of the SEC’s enforcement division.
“Both HSBC and Scotia Capital self-reported and self-remediated their recordkeeping violations, and the reduced penalties in these cases reflect their efforts and cooperation. As we continue our efforts to ensure compliance with the commission’s essential recordkeeping requirements, we encourage other firms to take note and likewise self-report,” he added.