On Tuesday, the Securities and Exchange Commission (SEC) fined 16 of Wall Street's major financial organisations $1.1 billion for failing to supervise employee correspondence. 

Barclays Capital, Citigroup, Morgan Stanley, Goldman Sachs, and Bank of America will pay SEC recordkeeping law penalties. These companies' investment banking executives, equity, and debt traders have violated the Securities Exchange Act of 1934 by using unmonitored personal devices to discuss business.

SEC Chair Gary Gensler stated: 

“Finance, ultimately, depends on trust. By failing to honour their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust. Since the 1930s, such recordkeeping has been vital to preserve market integrity. 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. As part of our examinations and enforcement work, we will continue to ensure compliance with these laws.”

Along with the accusations, the banks were ordered to stop violating the Act and update their practises to integrate the rule and control employee digital communications.

Gurbir S. Grewal, director of the SEC’s division of enforcement, added: 

“These 16 firms not only have admitted the facts and acknowledged that their conduct violated these very important requirements, but have also started to implement measures to prevent future violations. Other broker dealers and asset managers who are subject to similar requirements under the federal securities laws would be well-served to self-report and self-remediate any deficiencies.”

SEC investigation continues. Morgan Stanley was fined $35 million last week for failing to protect 15 million client data.