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$200 million fine for UBS and Credit Suisse

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Brokers routinely discussed business deals on private devices, without storing the communications. © Keystone / Gaetan Bally

The biggest two Swiss Banks have each been fined $200 million (CHF199 million) as part of a large-scale US investigation into the failure to preserve electronic communications.

The Securities and Exchange Commission (SECExternal link) and the Commodity Futures Trading Commission (CFTCExternal link) said in separate statements on Tuesday that they had fined 16 financial firms a combined total of $1.8 billion after staff had discussed deals on their personal devices and apps. Beyond the two Swiss banks, the groups involved include Barclays, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley.

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Investigators said that from January 2018 to September 2021, the banks’ staff routinely communicated about business matters such as debt and equity deals with colleagues, clients, and other third party advisers using applications on personal devices such as text messages and WhatsApp.

The institutions did not preserve the majority of those personal chats, violating US rules which require brokers and financial institutions to keep records of business communications. That likely impeded the agencies’ ability to gather evidence in other, unrelated investigations, they said.

Trust issue

“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said Gary Gensler, the chair of the US Securities and Exchanges Commission.

“Today’s actions – both in terms of the firms involved and the size of the penalties ordered – underscore the importance of recordkeeping requirements: they’re sacrosanct. If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records,” said Gurbir Grewal, Director of the SEC’s Division of Enforcement.

The institutions, which cooperated with the investigation, have begun implementing improvements to their compliance policies and procedures, the SEC said.

According to the Reuters news agency, a UBS spokesperson said the bank was pleased to have resolved the matter; Credit Suisse declined to comment.

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