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by Mike Caswell

The U.S. Securities and Exchange Commission and the Commodity Trading Futures Commission have imposed a combined $549-million in penalties on a group of banks and brokerages, including Bank of Montreal, for record-keeping failures. (All figures are in U.S. dollars.) The SEC claims that the firms had "widespread and longstanding failures" to properly preserve electronic communications. The firms allowed employees to have unrecorded business communications through what the SEC calls "off-channel" methods, with those methods including text messages through personal devices.

The sanctions are contained in several administrative orders that the SEC and CFTC released on Tuesday, Aug. 8. The orders target 10 banks and brokerages, with the largest fines, totalling $200-million, going to Wells Fargo Bank NA and two related firms. Included amongst the group is Bank of Montreal, which will pay $35-million plus a $25-million fine imposed on its brokerage arm, BMO Capital Markets Corp. The penalties represent settlements concluded without a hearing, in which the banks and brokerages have admitted to the violations and have agreed to pay the fines.

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