As the banking crisis continues in the US, financial regulators continue to scrutinize large financial companies such as HSBC and Scotiabank.
The Securities and Exchange Commission (SEC) has charged HSBC’s securities arm HSBC Securities (HSI) and Scotiabank’s investment subsidiary Scotia Capital with a number of penalties, including record-keeping violations. HSI agreed to pay $15 million to settle with the SEC, while Scotia Capital agreed to pay $7.5 million. In addition, Scotia paid $15 million to settle the US Commodity Futures Trading Commission’s charges.
SEC Clarifies Matter
Announcing the news on May 11, the SEC stated that banks had failed to meet record keeping requirements for dealers registered with US market regulators.
Officials said HSBC and Scotiabank employees used unauthorized communication channels such as text messages and WhatsApp. Commenting on the subject, the SEC said: “General managers and senior auditors responsible for overseeing lower-level employees communicated about the firm’s broker-dealer business using non-firm-approved methods on their personal devices and did not comply with firm policies.” He used his expressions.
According to the regulator, HSI’s failure to enforce policies prohibiting such communications resulted in its failure to reasonably supervise its employees under section 15(b)(4)(E) of the Exchange Code.
“Both firms failed to protect the significant majority of these communications in violation of federal securities laws,” the SEC continued in its statement.
HSBC and Scotiabank are the last Wall Street firms to be fined for their employees using personal devices and messaging apps. In September 2022, it was reported that US officials had fined nearly $2 billion in such cases and penalized firms for talking about deals, trades, and personal practices. US regulators launched an extensive investigation into financial companies using personal messaging apps like WhatsApp in 2021.
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