Wall Street firms paying millions in penalties over WhatsApp use

Nearly a dozen Wall Street firms have agreed to pay $289 million in penalties over their “widespread and longstanding failures” to preserve company communications from iMessage, WhatsApp and Signal, the U.S. Securities and Exchange Commission (SEC) said Tuesday.

Eleven firms, including Wells Fargo and BNP Paribas, admitted that their employees had frequently used such “off-channel” communications for business activities since at least 2019, the “substantial majority” of which were not maintained or preserved as required by federal securities laws.

The SEC argued that this failure to maintain records “likely deprived” the commission of relevant communications in various investigations.

“Recordkeeping failures such as those here undermine our ability to exercise effective regulatory oversight, often at the expense of investors,” Sanjay Wadhwa, the deputy director of the SEC’s Division of Enforcement, said in a statement Tuesday.

Gurbir Grewal, the director of the Enforcement Division, noted that the commission has brought 30 enforcement actions and ordered more than $1.5 million in penalties to date in order to drive home the importance of compliance with record keeping requirements.

“Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets,” Grewal added in a statement.