U.S. Bank to pay $6M to settle CFTC WhatsApp probe

Dive Brief:

U.S. Bank agreed to pay $6 million to settle an investigation into record-keeping and off-channel communications, the Commodity Futures Trading Commission said Tuesday.
The CFTC penalty comes roughly a month after the Securities and Exchange Commission fined the Minneapolis-based bank $8 million, making similar allegations.
The bank, functioning as a swap dealer for the CFTC’s purposes, has “been working proactively to enhance our technology and oversight, to meet the expectations of our regulators and needs of our clients; and are pleased to have this matter behind us,” a U.S. Bank spokesperson said in an email Tuesday.

Dive Insight:

U.S. Bank, between 2019 and now, “failed to stop employees, including those at senior levels, from communicating using unapproved communication methods,” including personal text messages, to conduct business, the CFTC said Tuesday.

The lender warned investors in November it was in “resolution discussions” with the SEC, and that the CFTC had requested “information concerning compliance with record retention requirements relating to electronic business communications.”

The regulators have ordered major financial institutions, collectively, to pay billions of dollars in penalties in connection with the WhatsApp probes since December 2021. The penalties have tended to come in waves, and the largest U.S. banks have paid around $200 million apiece, split between the SEC and CFTC, to settle the charges.

However, regulators’ focus on banks may be winding down, Matt Bisanz, a partner in the financial services regulatory and enforcement practice at Mayer Brown, told Banking Dive in an email.

“I suspect most communication violations involving a bank are done and most of the focus will be on nonbank dealers/asset managers,” Bisanz wrote Tuesday.

The CFTC additionally ordered the introducing broker Oppenheimer to pay $1 million over record-keeping violations. The firm agreed to pay $12 million to the SEC in February.

U.S. Bank cooperated fully with the CFTC’s investigation, the spokesperson said Tuesday.