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Regulation and Compliance > Federal Regulation

UBS Says It’s Part of Probe Into Unapproved Staff Messaging

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UBS AG signaled that it’s part of a broad probe by U.S. regulators into messaging by bank employees that’s likely to saddle lenders with fines of about $1 billion.

The Swiss bank is co-operating with investigations by the Securities and Exchange Commission and the Commodity Futures Trading Commission “regarding compliance with records preservation requirements relating to business communications sent over unapproved electronic messaging channels,” it said in its earnings report on Tuesday.

The disclosure comes after several U.S. investment banks including Morgan Stanley and Citigroup Inc. earlier this month said they expect to pay about $200 million each to settle their part of the probe.

That may means that U.S. regulators are poised to levy about $1 billion in fines just from the five biggest U.S. investment banks for failing to monitor employees using unauthorized messaging apps.

Deutsche Bank AG and HSBC Holdings Plc are the other European lender that have said they’re part of the probe.

Finance firms are required to monitor and store business-related communications by their staff to prevent improper conduct and allow regulators to scrutinize messages.

That system, already challenged by the proliferation of mobile-messaging apps, was strained further as firms sent workers home shortly after the start of the Covid-19 outbreak.

In December, the SEC and the CFTC imposed $200 million in fines on JPMorgan, saying that even managing directors and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication.


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