The SEC has charged two major financial institutions, HSBC Securities Inc. and Scotia Capital Inc, with failing to preserve records of electronic communication amongst employees, in violation of federal securities laws.
According to the SEC’s investigation, employees and executives of both HSBC and Scotia Capital used “off-channel” messaging platforms such as WhatsApp via their personal devices to discuss business matters amongst one another, whilst failing to maintain adequate records of those communications. Both financial institutions admitted their conduct was in violation of recordkeeping provisions, with HSBC and Scotia Capital agreeing to pay a $15 million and $7.5 million penalty, respectively.
“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,” commented SEC Division of Enforcement Gurbir S. Grewal. In addition to the financial penalties, the banks also agreed to cease and desist from conducting further unrecorded electronic communications, as well as retain compliance consultants to ensure such violations don’t occur again.
Information for this briefing was found via the SEC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
