SEC Fines HSBC Securities and Scotia Capital for Electronic Communication Failures

The Securities and Exchange Commission (SEC) charged HSBC Securities (USA) Inc. and Scotia Capital (USA) Inc. for failing to maintain and preserve electronic communications. Both firms admitted to using off-channel personal devices, such as WhatsApp, in order to communicate about securities business matters which they failed to record or save. The SEC penalized both firms by issuing a $15 million fine to HSBC Securities and a $7.5 million fine to Scotia Capital. In addition to the financial penalties, both companies were ordered to cease and desist from committing similar violations and retain compliance consultants in order to review their policies and procedures related to the retention of electronic communications.