SCGLF - HSBC Scotia Capital charged by SEC for violating recordkeeping provisions

2023-05-11 10:19:13 ET

HSBC Securities, a U.S. unit of HSBC ( NYSE: HSBC ) and Scotia Capital, a U.S. unit of The Bank of Nova Scotia ( NYSE: BNS ) ( TSX: BNS:CA ), were charged by the U.S. Securities and Exchange Commission for failing to maintain and preserve electronic communications.

The SEC found that employees of the registered broker dealers "often communicated 'off-channel' about securities business matters on their personal devices, using messaging platforms, such as WhatsApp." But neither firm kept the bulk of these communications, thus breaching certain recordkeeping provisions of federal securities laws.

HSBC and Scotia admitted to wrongdoing and agreed to settle the charges by paying penalties of $15M and $7.5M, respectively.

HSBC and BNS retreated 2.7% and 0.4% , respectively, in Thursday morning trading.

In addition, the firms cooperated with the SEC's probe by self-reporting the recordkeeping failures after gathering communications from the personal devices of a sample of the firms’ personnel, the regulator said.

Separately, the Commodity Futures Trading Commission ordered The Bank of Nova Scotia ( BNS ) to pay a $15M fine for related conduct, according to a release .

The SEC has been clamping down on financial firms that violated recordkeeping requirements by using unapproved messaging applications such as WhatsApp when it comes to business matters. In February, the SEC investigated Societe Generale's ( OTCPK:SCGLF ) U.S. arm over whether the lender has been keeping tabs of recordkeeping rules in connection with employees' communications on unauthorized messaging platforms.

More on HSBC and BNS

• Scotiabank: A Boring, High-Dividend Company That Provides Income

• HSBC: In Line Results, Equal Weight Reiterated

• HSBC stock rises after declaring quarterly dividend, stock buyback plans

For further details see: