US SEC nearing settlement with Wall Street firms over WhatsApp probe -sources

Voya Financial

28/09/2023 11:00

(Repeats story with no changes to text)
    By Chris Prentice and Carolina Mandl
       NEW YORK, Sept 27 (Reuters) - The U.S. Securities and
Exchange Commission (SEC) is finalizing settlements with around
two dozen Wall Street firms to resolve investigations into
record-keeping lapses, said two people with knowledge of the
matter.
    The settlements with broker-dealers and investment advisers
would mark the latest enforcement action in the SEC's two-year
crackdown on Wall Street's use of WhatsApp and other unapproved
messaging apps that has so far resulted in more than $2 billion
in fines. 
    Under the deals being finalized with the SEC, the firms
would pay fines, admit wrongdoing and commit to fixing the
lapses, including by hiring independent consultants to overhaul
their record-keeping programs, the two sources said. One said
some firms could pay as much as $50 million.
    The SEC is expected to announce some of the settlements in
one group ahead of its fiscal year-end on Sept. 30, but the
negotiations are fluid, said a third source familiar with the
situation. 
    The sources, who spoke on the condition of anonymity because
SEC investigations are confidential, said roughly two dozen
firms are involved but Reuters could not immediately ascertain
their names. 
    At least 16 broker-dealers and investment advisers have
disclosed in regulatory filings that the SEC is probing their
communications, including Truist Financial Corp  TFC.N , US
Bancorp  USB.N , Voya Financial Inc  VOYA.N , LPL Financial
 LPLA.O , Interactive Brokers  IBKR.N  and Oppenheimer  OPY.N . 
    Fifth Third Bancorp  FITB.O  said in an Aug. 7 SEC filing
that it is "engaged in settlement negotiations" on the matter
and did not anticipate a material impact on its financials.
    Spokespeople for the SEC, Fifth Third, LPL, US Bancorp,
Truist, Oppenheimer and Interactive Brokers all declined to
comment. Voya did not respond to requests for comment.
    The SEC has previously negotiated two other large group
settlements as part of its "off-channel" communications probe. 
    The agency has so far brought 30 related enforcement
actions, including with separate entities of the same group.
    In August, regulators fined nine Wall Street firms,
including Wells Fargo  WFC.N  and Societe Generale  SOGN.PA , a
combined $549 million over employees' use of personal messaging
apps. In September 2022, it fined 16 firms, including Goldman
Sachs, Morgan Stanley, Citigroup and Bank of America, $1.8
billion for similar lapses.
   On Monday, Reuters reported that in the latest phase of the
probe, the SEC has in recent month collected texts and other
messages from more than a dozen investment advisers, including
private equity and hedge funds, escalating its investigation. 
    Because companies do not keep a close watch on personal
messaging channels, using them to discuss business puts
SEC-regulated employers in breach of requirements to record all
business communications. 
    The SEC began to home in on Wall Street's record-keeping
problem when JPMorgan Chase  JPM.N  failed to provide documents
from at least 2018 pertaining to an unrelated probe, according
to a 2021 settlement in which the bank agreed to pay the SEC
$125 million to resolve charges over record-keeping lapses.
    

 (Reporting by Chris Prentice and Carolina Mandl; Editing by
Michelle Price and Jacqueline Wong)
 ((christine.prentice@thomsonreuters.com; +1 (202) 843-6464;))