Wells Fargo appears to be the latest big bank ensnared in the industrywide personal-device misuse scandal.
The Securities and Exchange Commission and Commodity Futures Trading Commission “have undertaken investigations regarding [Wells Fargo’s] compliance with records retention requirements relating to business communications sent over unapproved electronic messaging channels,” the San Francisco-based lender warned investors Tuesday on page 139 of an SEC filing.
The warning comes roughly five months after the SEC and CFTC fined 11 Wall Street banks and brokerages more than $1.8 billion for conducting some company business on messaging platforms such as WhatsApp.
At least two other big banks this month have flagged regulators’ inquiries into record-keeping, suggesting a new wave of settlements could be in the works.
HSBC CEO Noel Quinn said Tuesday his bank is in the “final stages” of a deal with regulators over the misuse of messaging platforms.
“We’ve reached an agreement,” Quinn told Bloomberg. “We’ve not disclosed yet the final settlement.”
The bank first warned investors in last year’s annual report of a CFTC investigation into “interest rate swap transactions related to bond issuances, among other things, as well as the use of non-HSBC approved messaging platforms for business communications.”
“I don’t think it’s specific, I think it’s general across all financial institutions,” Quinn said in February 2022.
French banking giant Societe Generale this month also revealed in its annual report that its Americas Securities unit “has received requests for information” from the SEC “focused on compliance with record-keeping requirements in connection with business-related communications on messaging platforms that were not approved by the firm. SocGen “is cooperating with the investigation,” the bank said.
JPMorgan Chase in December 2021 became the first big bank to settle messaging probes by the SEC and CFTC when it agreed to pay the regulators $200 million over failure to maintain and preserve its bankers’ written communications.
The October wave of settlements mirrored that deal. Barclays, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS all paid $125 million to the SEC and $75 million to the CFTC — Bank of America paid slightly more — meaning Wells Fargo could be on the hook for a similar amount, though the bank did not detail a final figure.
Wells Fargo CEO Charlie Scharf has prioritized getting on the right side of regulators since becoming chief executive in 2019. The bank in December reached a record $3.7 billion settlement with the Consumer Financial Protection Bureau over a slew of consumer abuses related to auto loans, mortgages, and deposit accounts. Wells Fargo this month agreed to pay $300 million to settle an auto insurance-related class-action lawsuit ahead of a trial that was due to start next week.
