Washington D.C. – The Commodity Futures Trading Commission (CFTC) has simultaneously filed and settled charges against affiliates of 11 financial institutions, including Bank of America, for failing to maintain adequate records and supervise employee communications as required by CFTC regulations. The charges center on the firms’ inability to preserve records of communications sent via unapproved methods, such as personal text messages and apps like WhatsApp and Signal.
The CFTC orders detail years of failures by the financial institutions to prevent employees, including those in senior positions, from conducting business communications on personal devices and through unapproved channels. These communications often related to the firms’ regulated activities but were not maintained or preserved, hindering the CFTC’s ability to conduct examinations and investigations.
While the specific penalties vary, each settling registrant is ordered to cease and desist from further violations of recordkeeping and supervision requirements and to undertake specified remedial actions to improve compliance. Bank of America, along with Nomura, neither admitted nor denied the specific findings of the Division of Enforcement’s investigation.
“The Commission’s recordkeeping and supervision requirements ensure the safety and integrity of the U.S. derivatives markets and protect customers and market participants,” stated CFTC Chairman Rostin Behnam. “As demonstrated today, the Commission will vigorously pursue registrants who fail to comply with their core regulatory obligations and hold them accountable.”
Acting Director of Enforcement Gretchen Lowe emphasized the importance of recordkeeping, stating, “Recordkeeping requirements are key to the Commission’s oversight of registrants…a registrant’s disregard of its obligations threatens the Commission’s ability to effectively and efficiently conduct examinations and investigations.”
The CFTC’s investigation stemmed from discoveries made during separate investigations into trading practices at the institutions. These investigations revealed the widespread use of unapproved communication methods by traders. Each firm acknowledged to CFTC staff that they were aware of the longstanding practice of employees using these methods for business-related communication.
Source: CFTC.gov
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