The Securities and Exchange Commission announced the charges on Tuesday after a monthslong investigation found that Wall Street firms did not monitor how employees were communicating on work-related matters or keep records of those messages, as federal law requires.
The large banks that admitted wrongdoing and settled with the regulator include Bank of America, Barclays, Citigroup, Goldman Sachs and Morgan Stanley. Each will pay $125 million to the S.E.C.
The S.E.C. imposed fines totaling $1.1 billion on 16 firms, including five affiliates of the large banks. The Commodity Futures Trading Commission imposed an additional $710 million in fines on 11 financial firms, some of which were also charged by the S.E.C. The biggest banks agreed to each pay $75 million to the C.F.T.C.
Regulators reached a similar $200 million resolution with JPMorgan Chase this summer. At the time, the S.E.C. noted that the bank’s failure to stop employees from using text messages on personal phones to communicate could have an impact on investigations and monitoring of bank activities. It indicated that similar settlements with other banks were likely.
“As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications,” Gary Gensler, the S.E.C. chair, said in a statement.
Regulators found that from 2018 to 2021, bank employees frequently used WhatsApp and other text messaging services to chat with one another and people outside the bank instead of using their work emails or other official forms of communication.
It is standard practice for banks to preserve communications on official emails, but it becomes more challenging to do so when the back-and-forth takes place on private messaging services.