U.S. regulators order CIBC to pay US$42 million in employee communications probe
Canadian bank fined the largest amount in probe
Regulators in the United States have ordered the Canadian Imperial Bank of Commerce to pay about US$42 million in penalties for failing to stop its employees from using unapproved communication methods.
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U.S. regulators order CIBC to pay US$42 million in employee communications probe Back to video
The Toronto-based bank was ordered to pay US$30 million by the Commodity Futures Trading Commission (CFTC) and US$12 million by the U.S. Securities and Exchanges Commission (SEC), agencies that regulate the derivatives and securities markets, respectively, in the U.S.
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The SEC penalized 10 other companies for a total of about US$88 million, including Toronto-based Canaccord Genuity LLC., which will pay US$1.25 million, a “significantly lower” penalty since it self-reported the violations, the SEC said in a statement on Tuesday.
The CFTC said CIBC’s violations had been taking place since at least 2018 and included senior-level officers sending messages via personal text.
“CIBC was required to keep certain of these written communications because they related to the firm’s CFTC-registered business,” the agency said in a statement on Tuesday. “These written communications generally were not maintained and preserved by CIBC, and CIBC generally would not have been able to provide them promptly to the CFTC if and when requested.”
The SEC said investigations into the firms uncovered “pervasive and longstanding” use of “off-channel” communications. The failure to maintain and preserve required records deprives the SEC of these communications in the investigations.
“Throughout this process, CIBC offered its full co-operation to both regulators and took immediate steps to implement remedies internally,” CIBC spokesperson Andrew McGrath said in a statement on Tuesday.
Four other Canadian banks have been ordered to pay penalties in the past year by those two U.S. agencies.
In August, Royal Bank of Canada was ordered by the SEC to pay US$45 million. Toronto-Dominion Bank was ordered to pay US$30 million by the SEC and US$78 million by the CFTC.
In 2023, the CFTC fined the Bank of Nova Scotia US$15 million and the Bank of Montreal US$35 million for using unapproved communication methods, including messages sent via personal text and WhatsApp.
In total, the CFTC has imposed US$1.237 billion in civil monetary penalties on 27 financial institutions since December 2021 for their use of unapproved methods of communication.
• Email: nkarim@postmedia.com
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