U.S. regulators have imposed civil penalties on subsidiaries of Bank of Nova Scotia (BNS.TO) and HSBC Holdings Plc (HSBA.L) for pervasive recordkeeping violations resulting from employees’ use of personal devices and apps for work communications.
The banks acknowledged that they had not complied with recordkeeping requirements for dealers registered with U.S. market regulators.
The Securities and Exchange Commission (SEC) and HSBC Securities Inc. have reached a $15 million settlement. Scotia Capital consented to pay a total of $22.5 million: $15 million to satisfy U.S. Commodity Futures Trading Commission charges and $7.5 million to settle SEC charges.
HSBC and Scotiabank are the most recent Wall Street firms to incur fines for employees’ use of personal devices and communications apps since regulators launched a comprehensive investigation into the use of such platforms in 2021. In September, over a dozen institutions agreed to pay a total of $1,8 billion for such violations.
A spokesperson for HSBC stated, “In recent years, we have made substantial investments in enhancing our compliance procedures and worked diligently to maintain the highest standards of professional conduct throughout our organization.”
A spokesperson for Scotiabank stated, “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.”
According to the agency’s order, the CFTC discovered during its investigation that Scotiabank employees, including senior staff, were using off-channel communications such as text messages and WhatsApp.