HSBC and Scotiabank Fined for Recordkeeping Violations 

SEC Hits HSBC and Scotiabank with Hefty Fines for Recordkeeping Violations 

According to the Securities and Exchange Commission, the agency has charged two brokerage firms, HSBC Securities Inc and Scotia Capital with civil penalties for widespread recordkeeping violations through employees’ use of personal devices and apps for work communications. 

HSBC Securities Inc and Scotia Capital have agreed to pay $15 million and $7.5 million, respectively, to settle charges with the SEC. 

HSBC and Scotiabank are not the first Wall Street companies to face penalties for employees’ use of personal devices and messaging apps since regulators launched a major probe into use of such platforms in 2021. More than a dozen banks agreed to pay a total of $1.8 billion for similar violations last year. Both firms admitted to the violations. See JP Morgan Securities Hit with $125 Million 

According to a separate statement, Scotiabank and Scotia Capital also agreed to pay $15 million to the U.S. Commodity Futures Trading Commission, for related charges. 

Off-Channel Communications 

Brokers and registered investment advisers have recordkeeping requirements. U.S. regulators have grown increasingly concerned about brokers and agents use of personal devices, which makes oversight difficult. 

Broker-dealers are required to preserve for at least three years originals of all communications received and copies of all communications sent relating to its business.   

According to the complaints, investigators uncovered “pervasive and longstanding” use of off-channel communications at both companies. For example, during the relevant period, a managing director in HSBC Securities’ investment bank exchanged hundreds of off-channel business-related messages with HSBC colleagues, investment banking clients, and personnel at other financial services firms. Within the firm, this managing director communicated with other managing directors and junior employees under his supervision.   

According to the complaints, investigators uncovered “pervasive and longstanding” use of off-channel communications at both companies. Both companies notified SEC’s enforcement staff of the issues and had begun to remediate them, according to the regulator. 

Both companies notified SEC’s enforcement staff of the issues and had begun to remediate them, according to the regulator. 

Hiring a Securities Attorney 

If you are concerned about your investments the White Law Group may be able to help you by filing a FINRA arbitration claim against your brokerage firm. For a free consultation with a securities attorney, please call 888-637-5510.     

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.        

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.         

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