HSBC, Scotiabank hit with US penalties for recordkeeping violations

WASHINGTON: US regulators hit units of Bank of Nova Scotia and HSBC Holdings with civil penalties for widespread recordkeeping violations through the use of personal apps for work communications.

HSBC Securities Inc and Scotia Capital, which are registered brokers, have agreed to pay $15 million and $7.5 million, respectively, to settle charges from the US Securities and Exchange Commission, the regulator said in a statement. Scotiabank and Scotia Capital, registered dealers with the US Commodity Futures Trading Commission, also agreed to pay $15 million to the CFTC for similar charges, according to a separate statement.

Lawyers for the companies, which admitted to the wrongdoing, did not respond immediately to requests for comment.

The SEC said it had uncovered “pervasive and longstanding use of off-channel communications” at both companies. HSBC and Scotia both admitted their employees used personal devices and messaging platforms such as WhatsApp to discuss work, the regulator said. The regulators have been targeting such use of personal devices by registered dealers since at least 2021, when the SEC launched a sweep of major Wall Street banks over the issue.