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Ten Wall Street firms have agreed to pay a total of $79 million in fines to the U.S. Securities and Exchange Commission, the latest round of fines stemming from employees sending messages on platforms such as WhatsApp.
The U.S. Securities and Exchange Commission on Friday filed charges against broker-dealers and investment advisers including Perella Weinberg Partners and Interactive Brokers for “pervasive and persistent failure to maintain and preserve electronic communications.”
The move is the latest effort by regulators to target messaging practices on Wall Street. The enforcement actions forced the bank to review its messaging policies and lay off some employees.
The companies charged Friday acknowledged the SEC’s findings and acknowledged that they violated U.S. securities laws, regulators said. Perella Weinberg and two of its affiliates reported their violations and agreed to accept a minimum fine of $2.5 million.
“One of the orders included in the action announced today is unlike the others,” said Gurbir Grewal, director of the SEC’s Division of Enforcement. “There are real benefits to self-reporting, remediation and collaboration.”
Interactive Brokers and its affiliates agreed to penalties of up to $35 million and face a $20 million fine from the Commodity Futures Trading Commission for similar violations.
According to the SEC, its investigation into Interactive Brokers “uncovered widespread off-channel communications at all seniority levels.” On one occasion, a group leader in the United States had business conversations with at least 32 employees via text messages and WhatsApp.
Robert W Baird & Co agreed to pay $15 million and William Blair & Company and its affiliates paid $10 million. Other businesses include Nuveen Securities and Fifth Third Securities.
Nouwen and Baird said they were pleased to have resolved the issue. Baird added that it was “disappointed by the findings” but had “strengthened our compliance procedures in recent years”. William Blair declined to comment. Other companies did not immediately respond to requests for comment.
A broker-dealer charged by the U.S. Securities and Exchange Commission admitted that employees exchanged personal information about the business. The regulator said the investment adviser confirmed that employees used “offline communications” to discuss potential recommendations or opinions. The misconduct began at least in 2019 and included supervisors and senior executives.
The regulator said the companies’ failure to preserve the vast majority of communications “potentially deprived” the SEC of information for its various investigations.
In addition to the penalties, the companies were ordered not to repeat recordkeeping violations and to hire independent compliance consultants.
Last year, 11 Wall Street banks and brokers, including Goldman Sachs, Morgan Stanley and Barclays, agreed to pay more than $1.8 billion in fines for “pervasive” and “chronic” record-keeping lapses.
Last month, nine different companies agreed to pay fines totaling $555 million for similar violations.
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