U.S. regulators order CIBC to pay US$42 million in employee communications probe

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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.

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.

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