Wall Street Firms Fined $549 Million by Regulators for Using WhatsApp, iMessage

U.S. regulators charged several Wall Street firms for allowing employees to use “off-channel” communications like Apple's iMessage and WhatsApp to conduct business, with fines totaling $549 million.

An investigation by the Securities and Exchange Commission found that the 10 broker-dealers, and one dually registered broker-dealer and investment adviser, violated record-keeping provisions of federal securities laws.

The firms admitted that from at least 2019, their employees communicated about business matters through messaging platforms on their personal devices, including iMessage, WhatsApp, and Signal. According to the SEC, the firms didn’t keep the majority of records of the communications, which involved employees at multiple levels of authority, in violation of federal securities laws.

At Wells Fargo, for example, the SEC found that nearly all of the individuals they requested records from had engaged in anywhere from less than 100 to over 1000 off-channel text messages during a two to three year period, according to the SEC order.

Wells Fargo Securities, together with Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network, agreed to pay the SEC a $125 million penalty, and BNP Paribas Securities Corp. agreed to pay $35 million. In total, the 11 firms owe the SEC $289 million in fines.

The Commodity Futures Trading Commission also charged four financial institutions — Wells Fargo, BNP Paribas, Bank of Montreal and Société Générale — for failing to meet its record-keeping requirements. The banks will have to pay a total of $260 million to the CFTC, with Wells Fargo and BNP Paribas each paying $75 million.

“Today’s actions stem from our continuing sweep to ensure that regulated entities, including broker-dealers and investment advisers, comply with their recordkeeping requirements, which are essential for us to monitor and enforce compliance with the federal securities laws,” Sanjay Wadhwa, deputy director of enforcement at the SEC, said in a statement. “Record-keeping failures such as those here undermine our ability to exercise effective regulatory oversight, often at the expense of investors.”

Each of the firms was also ordered to cease and desist from future violations and was censured. They agreed to have independent compliance consultants to conduct comprehensive reviews of their electronic communications policies and procedures, as well as frameworks for addressing non-compliance.

Gurbir Grewal, director of the SEC’s division of enforcement, issued a warning to other firms to comply with record-keeping requirements.

“If you adopt that playbook, you’ll have a better outcome than if you wait for us to come calling,” he said in a statement.