HSBC fined £12m by US authorities over record-keeping failures

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Banking giant HSBC is to pay a 15 million US dollar (£12 million) penalty after being charged by US authorities over record-keeping failures.

The US Securities and Exchange Commission (SEC) charged the London-listed bank over “widespread and longstanding failures” by the firm and employees “to maintain and preserve electronic communications”.

The SEC also charged US brokerage firm Scotia Capital with similar failings resulting in a 7.5 million dollar penalty.

Investigations by the SEC found “pervasive and longstanding use of off-channel communications at both firms”, with them admitting that employees often communicated about business matters on personal devices and with messaging platforms such as Whatsapp.

It said neither firm preserved the “substantial majority” of these communications, violating US security laws.

“Today’s actions should not only remind firms of the importance of following SEC recordkeeping requirements, but also the value of disclosing violations when they do occur,” said Gurbir S Grewal, director of the SEC’s division of enforcement.

“Both HSBC and Scotia Capital self-reported and self-remediated their recordkeeping violations, and the reduced penalties in these cases reflect their efforts and co-operation.

“As we continue our efforts to ensure compliance with the commission’s essential recordkeeping requirements, we encourage other firms to take note and likewise self-report.”

An HSBC spokeswoman said: “The bank is pleased to put these matters behind us, and we appreciate that both the SEC and CFTC (Commodity Futures Trading Commission) recognise our commitment to remediating our internal controls when needed.

“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 organisation.”

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