The SEC watchdog on Thursday levied $390 million in fines on 26 Wall Street investment firms as part of its latest crackdown on misuse of text and WhatsApp messaging.
The fined firms included Ameriprise Financial, Edward Jones, LPL Financial and Raymond James, which each agreed to pay $50 million to settle the allegations.
BNY’s Pershing Asset Management division was forced to pay a $40 million fine.
Documents published online Executives at BNY’s securities division and Pershing LLC “used personal devices to communicate both internally and externally via text message and unauthorized written communications platforms, including WhatsApp,” the bank said.
Federal law prohibits investors from conducting business on personal devices because such records would not be monitored, making it harder to defend against fraud.
A BNY spokesman said: “The firm takes its regulatory responsibilities seriously and is pleased to have resolved this matter.”
The Meta-owned WhatsApp messaging service has already drawn the ire of SEC regulators, who are seeking to fine Wall Street firms that use the service to conduct business.
A broader crackdown on the use of WhatsApp, Signal and Apple messaging began in 2021, implicating JPMorgan, Goldman Sachs and Morgan Stanley and resulting in fines of more than $2 billion.
The company, along with 22 other companies named Wednesday, did not contest the findings; three reported on their own.
The companies were issued “cease and desist orders” warning them not to violate the rules again.
“We remain committed to ensuring compliance with the books and records requirements of the federal securities laws, which are essential to investor protection and the smooth functioning of markets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Federal law requires that financial institutions must keep proper records of all communications related to completed transactions and agreements.
If evidence of violations is found, heavy fines can be imposed by SEC officials.
Companies don’t monitor personal messaging channels, so using them to discuss business would violate the requirement that SEC-regulated employers record all business communications.
The idea is that keeping such records is important to prevent fraud and other wrongdoing.
Companies that self-report violations will pay significantly lower fines than they would if they didn’t.
Earlier this year, the Guggenheim Museum was asked to pay $15 million for similar violations as part of an $80 million crackdown on illegal records keeping.
