CIBC and Canaccord Genuity LLC are facing fines in the latest round of disciplinary actions for records-keeping violations in the United States.
On Tuesday, the U.S. Commodity Futures Trading Commission (CFTC) ordered a US$30-million penalty against CIBC, while the U.S. Securities and Exchange Commission (SEC) fined 11 firms a combined US$88.2 million — including a US$12-million fine against CIBC World Markets Corp. and CIBC Private Wealth Advisors Inc., and a US$1.25-million penalty for Canaccord — for using unapproved communication methods such as texting on personal devices.
Along with the financial sanctions, the CFTC order requires CIBC to cease and desist from violations of record-keeping and supervisory requirements, and to beef up its compliance in this area.
The bank admitted to the violations, including that, since 2018, it failed to prevent employees — including senior executives and compliance personnel — from communicating on unapproved channels, and that it failed to capture these communications, which is required by regulators to support their market oversight and was mandated by the bank’s own policies.
At the same time, the SEC settled with 12 firms — including broker-dealers, investment advisers, and one dually registered firm — over similar misconduct, imposing a total US$88.2 million in penalties on 11 of those firms.
One firm didn’t have to pay a penalty, as it self-reported the violations and “demonstrated substantial efforts at compliance.”
The SEC noted that Canaccord and another firm also self-reported their violations, and “as a result, will pay significantly lower civil penalties than they would have otherwise.”
The biggest penalties were imposed on Stifel, Nicolaus & Company, Inc. and Invesco Distributors Inc., which each agreed to pay US$35 million to resolve the SEC’s charges.
“Today’s enforcement actions reflect the range of remedies that parties may face for violating the record-keeping requirements of the federal securities laws,” said Gurbir Grewal, director of the SEC’s enforcement division, in a release Tuesday.
“Widespread and longstanding failures, including where those failures potentially hinder the commission’s investor protection function by compromising a firm’s response to SEC subpoenas, may result in robust civil penalties.”