Canadian Imperial Bank of Commerce CM-T has become the last of Canada’s largest banks to be hit with a multimillion-dollar penalty from U.S. regulators over employees’ use of unapproved communication methods.
CIBC will pay US$30-million to the Commodity Futures Trading Commission (CFTC) and US$12-million to the Securities and Exchange Commission (SEC), the two regulators said Tuesday. In total, the SEC fined 11 firms more than US$88-million for widespread record-keeping failures. Independent investment bank Canaccord Genuity Group Inc. is the other Canadian name on the list; it agreed to pay a US$1.25-million penalty.
“From at least Sept. 2018 to the present, CIBC failed to stop employees, including those at senior levels, from communicating using unapproved communication methods, including messages sent via personal text,” the CFTC said in a statement.
CIBC spokesperson Andrew McGrath said the bank respects the decisions.
“Throughout this process, CIBC offered its full co-operation to both regulators and took immediate remedies internally,” he said via e-mail.
In August, Toronto-Dominion Bank and Royal Bank of Canada agreed to pay US$124.5-million and US$45-million respectively in combined penalties to the two regulators for similar violations. In 2023, Bank of Nova Scotia paid US$22.5-million and Bank of Montreal paid US$60-million for failing to stop employees from using personal messaging apps such as WhatsApp, Signal and iMessage.
Brokers, swap dealers and investment advisers registered with the two U.S. agencies are required to keep detailed records of their communications and turn them over for review upon request. Regulators have been cracking down on the use of personal devices in recent years amid concerns that failure to keep records of personal communications makes oversight and enforcement more challenging.
It has been less than two years since October, 2022, when the SEC updated its rules for how electronic records must be maintained to reflect the more widespread use of personal devices and messaging apps. The changes came almost exactly one year after a senior SEC official warned that more stringent recordkeeping requirements were in the works.
“You need to be actively thinking about and addressing the many compliance issues raised by the increased use of personal devices, new communications channels, and other technological developments like ephemeral apps,” SEC director of enforcement Gurbir Grewal said in an October 6, 2021, speech.
In Ontario, document retention regulations do not specify other messaging communications applications beyond e-mails and text messages, according to a February, 2023, report from law firm Osler, Hoskin & Harcourt LLP. That report cited July, 2021, guidance from the Ontario Securities Commission.
The CFTC has imposed US$1.2-billion in civil monetary penalties on 24 financial institutions since 2021, the agency said. Combined with related fines imposed by the SEC on more than 50 companies, that total is more than US$2.5-billion.