BNS Bank of Nova Scotia

By Dean Seal

The Securities and Exchange Commission has fined the U.S. units of HSBC Securities and Scotia Capital over their employees' use of messaging applications that violated record-keeping rules.

The Wall Street regulator said Thursday that HSBC and Scotia will pay penalties of $15 million and $7.5 million, respectively, to resolve claims that their employees communicated "off-channel" about securities business matters using their personal devices and messaging platforms, including WhatsApp.

The firms broke federal securities laws by failing to keep or preserve the majority of those communications, according to the SEC. The agency said the failures involved supervisors and senior executives.

Representatives for HSBC and Scotia didn't immediately respond to requests for comment.

HSBC and Scotia self-reported the violations after gathering communications from the personal devices of a sample of their respective personnel. The firms were given reduced penalties as a result of their self-reporting, self-remediation efforts and overall cooperation with the agency's investigation, SEC Enforcement Director Gurbir S. Grewal said.

The Commodity Futures Trading Commission issued an order on Thursday fining The Bank of Nova Scotia and Scotia Capital USA $15 million over the same conduct.

Last fall, both regulators ordered 11 of the world's largest banks and brokerages to pay $1.8 billion in penalties over similar record-keeping failures involving the use of personal devices and messaging platforms.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

May 11, 2023 10:17 ET (14:17 GMT)

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