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.

HSBC said in a statement that it is pleased to have resolved the matter.

"In recent years, we have made significant investments in enhancing our compliance procedures and have worked diligently to maintain the highest standards for professional conduct throughout our organization," according to HSBC.

A representative for Scotia didn't immediately respond to a request 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 the same record-keeping failures.


Write to Dean Seal at


(END) Dow Jones Newswires

May 11, 2023 11:12 ET (15:12 GMT)

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