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Deficient recordkeeping in the banking and finance sector


Deficient recordkeeping practices can have significant consequences in the banking and finance sector. Maintaining accurate records is essential to protect their customers’ interests.

There are many instances where the financial institutions have failed to meet recordkeeping standards because they don’t enforce or instruct their staff on the standards, or they choose not to in order to bolster their own profit.

This carelessness can lead to inaccurate or incomplete financial statements resulting in incorrect billing, overcharging or undercharging, causing financial hardship for customers and damage their credit rating.

Incorrect processing of transactions, such as deposits, withdrawals, and transfer errors in account balances, can cause customers to incur overdraft fees, miss out on interest payments or access to their retirement funds.

Below is a list of stories and reports on deficient recordkeeping practices in the banking and finance sector:


JPMorgan Admits to Widespread Recordkeeping Failures and Agrees to Pay $125 Million Penalty to Resolve SEC Charges

The Securities and Exchange Commission (today) announced charges against J.P. Morgan Securities LLC (JPMS), a broker-dealer subsidiary of JPMorgan Chase & Co., for widespread and longstanding failures by the firm and its employees to maintain and preserve written communications. JPMS admitted the facts set forth in the SEC’s order and acknowledged that its conduct violated the federal securities laws, and agreed to pay a $125 million penalty and implement robust improvements to its compliance policies and procedures to settle the matter.

“Since the 1930s, recordkeeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be an effective cop on the beat. As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight,” said SEC Chair Gary Gensler. “Unfortunately, in the past we’ve seen violations in the financial markets that were committed using unofficial communications channels, such as the foreign exchange scandal of 2013. Books-and-records obligations help the SEC conduct its important examinations and enforcement work. They build trust in our system. Ultimately, everybody should play by the same rules, and today’s charges signal that we will continue to hold market participants accountable for violating our time-tested recordkeeping requirements.”

Read more: Securities and Exchange Commission Press Release, 17 December 2021

Thousands lose pensions in firms’ ‘Fawlty Towers’ bungles (UK)

Firms have lost “whole box loads of paperwork” recording pension contributions and entitlements, meaning thousands could be deprived of their retirement income.

Hundreds of thousands of people may be deprived of the pensions they contributed to for years because of astonishing carelessness on the part of those entrusted with their money.

Thousands of mergers have occurred in the pensions industry in recent decades, many of them in the Eighties and Nineties when paper-based record keeping was the norm.

If papers were lost when a company moved to the premises of a new owner, there were often no backup records and all trace of pension rights was lost. Ros Altmann, the recently appointed government “tsar” for older people, said: “I have worked with pension schemes over the years where this has happened. It seems scarcely believable that companies entrusted with savers’ money could be so cavalier about these all-important records.”

Read more: The Telegraph (UK), 13 September 2021 (Paywall)

Barclays fined $3.75m after record-keeping failure

Barclays has been fined $3.75m (£2.28m) by a US regulator for allegedly failing to keep proper electronic records, emails and instant messages.

The shortcomings occurred between 2002 and 2012, said the Financial Industry Regulatory Authority (Finra).

Finra said the bank failed to preserve data detailing its orders, confirmation of trades, records of accounts and other information.

Barclays did not admit or deny wrong doing, but agreed to a censure.


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FINRA fines five ING firms $1.2 million for email retention and review violations

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined five affiliates of ING $1.2 million for failing to retain or review millions of emails for periods ranging from two months to more than six years. 

FINRA found that the firms failed to properly configure hundreds of employee email accounts to ensure that the emails sent to and from those accounts were retained and reviewed at various times between 2004 and 2012. In addition, four of the firms failed to set up systems to retain certain types of emails, such as emails using alternative email addresses, emails sent to distribution lists, emails received as blind carbon copies, encrypted emails and “cloud” email (emails sent through third-party systems). As a result of these failures, emails sent to and from hundreds of employees and associated persons were not retained; and because the emails were not retained, they were not subject to supervisory review.

In addition, four of the firms failed to review millions of emails that the firms’ email review software had flagged for supervisory review. At various times between January 2005 and May 2011, nearly six million emails flagged for review went unreviewed by supervisory principals because the email review software was not properly configured.

Read more: Finra, 19 February 2013

Records of civil service pension payments ‘unacceptable’ admit officials

Inadequate records of civil service pension payments are “unacceptable”, the government has said after a spending watchdog raised concerns.

The National Audit Office qualified the accounts of the Principal Civil Service
Pension Scheme after Whitehall was unable to provide certain information…Auditors refused to fully sign off the 2011 civil superannuation accounts, which detail the financial results of the main civil service pension scheme…The National Audit Office said the evidence it needed to calculate whether all members of the scheme and their beneficiaries had received correct payments had not been provided…It also said “insufficient evidence” had been provided to reassure Auditor General Amyas Morse that the scheme £144bn liability – the estimated amount needed to cover members’ future payments – was reasonable…While record-keeping had improved “significantly”, it said 6% of payments analysed could not be corroborated by relevant documents and action was needed to “identify gaps in historic records”.

Read more: BBC, February 1, 2013

Regulator slams Macquarie unit

AUSTRALIA’S biggest stockbroking firm, Macquarie Equities, has been forced by the corporate regulator to have an independent investigator oversee its operations after the broker was found to have ”serious compliance deficiencies” over four years. Macquarie Private Wealth, the retail division of investment bank Macquarie Group, has been lambasted by the Australian Securities and Investments Commission for ”recurring deficiencies” which the corporate regulator claims may have led to Macquarie giving clients inappropriate advice. The regulator is concerned that hundreds of its brokers and advisers failed to keep proper client records – as required under financial services laws – which may have also resulted in some of the firm’s clients not having enough information to make informed decisions.

Read more: Sydney Morning Herald, 30 January 2013

FMA finds issues with advisers’ record keeping (NZ)

One year on from the introduction of a new licensing regime New Zealand’s top level financial advisers are still struggling to document how they make investment decisions and recommendations to the public, according to the investment watchdog.

Read more: NZ Herald, July 10 2012

B of A sends woman to collections after she already paid off her credit card (US)

Bank of America’s foreclosure processes have been a wreck during the mortgage crisis — the bank has foreclosed on homes that no longer exist, used fraudulent procedures to speed through documents, and pushed borrowers into foreclosure because of small clerical errors. Now, the bank is apparently using its shoddy foreclosure practices on its credit card accounts too.

Kathy Stevens paid off nearly $2,000 in delinquent credit card debt to Bank of America in 2006. Since then, she’s been fighting collection agencies who want her to pay it off again. Bank of America allegedly sold Stevens’ account to outside collection agencies, but did not include documentation to show it had been “considered settled,” according to a lawsuit filed against the outside collectors.

Read more: Think Progress April 2, 2012

Lehman derivatives records a mess: Barclays’ exec

Barclays had no idea how big Lehman Brothers Holdings Inc’s futures-and-options trading business was when it considered taking over the defunct bank’s derivatives trades at exchanges in 2008, a Barclays executive said. “Lehman’s books were in such a mess that I don’t think they knew where they were,” Elizabeth James, a director of Barclays’s futures business, testified today in US Bankruptcy Court in Manhattan

She said Lehman’s lack of records initially prevented her from performing “due diligence” to discover what Lehman’s and its customers’ positions were, where Lehman kept its bank accounts, and who its brokers were.

Read more: Sydney Morning Herald  August 31, 2010 (paywall)

CFTC fines Introducing Broker $50,000 for failed record keeping

New World Holdings destroyed business records and failed to diligently supervise employees

CFTC fine:

Chicago based introducing broker New World Holdings (NWH) has been imposed a fine by the US Commodity Futures trading commission as it failed to keep proper records of its customers and neglected employee supervision. The monetary penalty amounts to $50,000 while the court has also prohibited the company from violating the Commodity Exchange Act and CFTC regulations in the future.

Read more: Leap Rate, 14 January 2014

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Australia)

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established on 14 December 2017 by the former Governor-General of the Commonwealth of Australia, His Excellency General the Honourable Sir Peter Cosgrove AK MC (Retd) to enquire into misconduct in the banking, superannuation and financial services industry.

The Governor-General issued Letters Patent which formally appointed High Court Judge the Honourable Kenneth Madison Hayne AC QC as the Royal Commissioner and outlined the terms of reference for the inquiry.

You can read the final report on the

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