Another major bank/broker-dealer hit by SEC action

investmentnews.com:

Paris headquartered BNP Paribas has announced that it is under scrutiny by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for its personnel’s non-compliant use of communication tools, violating archiving protocols.

Although it reported better than expected figures for Q2, and would have beaten last year’s profit numbers without the charge linked to unspecified litigation, the planned litigation payments mean that the eurozone’s biggest bank by market value saw a 5% drop in net profit from last year.

The French financial institution and its broker-dealer subsidiary have initiated tentative agreements with the respective regulatory bodies to settle the investigations, according to the earnings disclosure published yesterday. These tentative agreements are awaiting approval from the CFTC and SEC.

Although BNP Paribas did not explicitly disclose what penalties it may have agreed, it has revealed that it has earmarked €125 million, approximately $137.3 million, for litigation expenses, as shown in the financial report.

The company’s representative chose not to provide any comments.

The SEC and CFTC have been inspecting the practices of BNP Paribas Securities Corp., the American registered securities trading arm of the bank, for its “adherence to record conservation regulations related to the utilization of unauthorized digital messaging systems for business correspondences,” as was revealed in yesterday’s earnings statement.

Additionally, BNP Paribas SA, the bank’s parent company, has also attracted the attention of the CFTC for its digital record preservation practices.

BNP Paribas joins the list of global financial corporations held accountable for record-keeping norms.