BMO, Wall Street firms sanctioned for app violations

Bank of Montreal (BMO) is paying US$60 million to resolve allegations of record-keeping violations from U.S. securities and derivatives regulators.

The U.S. Commodity Futures Trading Commission (CFTC) settled charges against four firms, including BMO, for failing to stop employees from using unapproved messaging apps — such as WhatsApp, Signal and iMessage — and failing to capture communications made through these channels.

BMO agreed to pay US$35 million to settle the CFTC’s allegations. The other firms — BNP Paribas, Société Générale and Wells Fargo — each agreed to pay US$75 million.

At the same time, the U.S. Securities and Exchange Commission (SEC) also settled charges against 11 Wall Street firms, including BMO Capital Markets, for similar violations of record-keeping requirements involving unapproved communications apps.

BMO agreed to a US$25-million penalty to settle the SEC’s case.

The SEC also sanctioned various affiliates of BNP Paribas, Société Générale and Wells Fargo, along with a handful of other firms. In total, the firms paid US$289 million to resolve the SEC’s charges.

Alongside the financial penalties, the firms were ordered to cease and desist from future violations and to retain independent compliance consultants to review their policies and procedures relating to the retention of electronic communications.

“The commission’s message could not be more clear — recordkeeping and supervision requirements are fundamental, and registrants that fail to comply with these core regulatory obligations do so at their own peril,” said Ian McGinley, the CFTC’s director of enforcement, in a release.

Sanjay Wadhwa, deputy director of enforcement at the SEC, said in a statement that record-keeping failures “undermine our ability to exercise effective regulatory oversight, often at the expense of investors.” The SEC has ordered more than US$1.5 billion in penalties against 30 firms for similar violations.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.