The US Securities and Exchange Commission (SEC) has fined Santander US Capital Markets (SanCap) four million dollars (3.89 million euros) for the use of unauthorized messaging systems in commercial communications such as WhatsApp, according to the note sent this Monday by the US agency.
SanCap is an institutional broker based in New York that operates under the umbrella of Santander Corporate & Investment Banking (CIB) to provide fixed income, variable and structured products services to large companies and institutional clients. It was created in 2023 from the merger of Santander Investment Securities and Amherst Pierpoint Securities, the latter company that the bank acquired in the US in 2022.
Thus, the SEC has announced charges against nine investment advisors and three stockbrokers, among which is SanCap, due to failures by the entities themselves and their staff in the maintenance and preservation of electronic communications, “violating the record-keeping provisions” contained in US federal laws on investment.
The agency explains that the fined companies have admitted the facts presented to the SEC itself, recognizing that their conduct violated said federal laws, for which they have agreed to pay fines whose aggregate amount rises to 63.1 million dollars (61.5 million euros).
Thus, beyond Santander, three Blackstone firms (Blackstone Alternative Credit Advisors, Blackstone Management and Black Real Estate Advisors) have also been sanctioned with a total of 12 million dollars (11.69 million euros); Kohlberg Kravis Roberts & Co, with 11 million dollars (10.72 million euros); Charles Schwab & Co, with 10 million dollars (9.75 million euros); Apollo Capital Management, with 8.5 million dollars (8.2 million euros); Carlyle Investment Management, together with Carlyle Global Credit Investment Management and AlpInvest Partners BV, with 8.5 million dollars (8.2 million euros); TPG Capital Advisors, also with 8.5 million dollars (8.2 million euros); and PJT Partners will pay a smaller fine of $600,000 ($585,000) for filing the complaint on its own.
The SEC also indicates that these entities have already begun to implement improvements in their policies and procedures to address the misconduct committed.
The agency explains that, to effectively carry out its supervisory tasks, it depends on firms complying with the Registration Requirements of Federal Securities Investment Laws. «When companies do not comply with these obligations, the consequences go far beyond the poor presentation of documents; “Such failures affect the transparency and integrity of the markets and their participants,” he says in the statement.
It goes on to explain that the investigations carried out by the SEC served to uncover the use of unapproved communication systems, known as “off-channel communications.”
The offenses were committed by employees with different degrees of responsibility
The entities themselves have admitted that, during the periods reviewed, Your workers sent and received communications through these systemsmessages that had to be registered under US laws. Furthermore, these misconducts have been committed by employees with different degrees of responsibility, including supervisors and managers.
The entities have been accused of violating certain provisions of the Investment Advisers Act or the Securities Exchange Act regarding record preservation. In addition, they have been accused of not “reasonably” supervising their employees to detect and prevent these misconduct.
In addition to financial sanctions, each of the companies has been ordered to “cease and desist” from future communication records violations.
Previous fines to other companies
This is not the first time that the SEC has sanctioned investment banks for this reason. For example, in 2021, the SEC fined an affiliate of the investment bank JPMorgan Chase about $125 million for failing to keep records of its communications for almost two years, between January 2018 and November 2020.
Specifically, several of its employees communicated “often” about matters related to the stock market business through their personal mobile devices, through text messages, personal email accounts or through WhatsApp.
In 2022, it announced fines to banks such as Barclays, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, UBS, Jefferies or Nomura for the same act, while in 2023 it sanctioned entities such as Wells Fargo or BNP Paribas.
In these cases, the supervisor detected that the firms did not record these communications that were made through personal messaging systems, violating US legislation and depriving the supervisor himself of monitoring these messages, which could be detrimental to the protection of users. investors.
In addition, Morgan Stanley announced fines of between thousands and one million dollars to workers who carried out official procedures through WhatsApp and other messaging platforms, as reported by the ‘Finacial Times’ in January 2023.
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