Fifth Third has agreed to pay the Securities and Exchange Commission an $8 million penalty to settle the regulator’s investigation into bank employees’ use of unapproved channels for business communications, the Cincinnati-based lender said in an SEC filing Tuesday.
The notice marks the latest evidence that the SEC may be preparing to announce another round of penalties in its ongoing probe into banks’ unapproved use of WhatsApp and other messaging platforms and subsequent failure to comply with related record-keeping requirements. The SEC and Commodity Futures Trading Commission have dished out more than $2 billion in record-keeping-related penalties to more than two dozen firms since 2021.
Fifth Third’s cross-Ohio rival, KeyBank, said last Thursday in its own 10-Q filing that it is “currently engaged in settlement negotiations with the SEC” regarding the record-keeping probe. U.S. Bank, a day earlier, said it, too, “is in resolution discussions with the SEC” over a similar matter.
Fifth Third said “other prospective relief” may come alongside the SEC penalty, agreed Sept. 29 — an indication the bank may pay a separate penalty to the CFTC, which is investigating record-keeping compliance at Fifth Third’s registered swap dealer.
While the settlement may be news to Fifth Third investors, the record-keeping investigations aren’t. Fifth Third warned as early as February that its broker-dealer and investment advisory subsidiaries were “cooperating with an investigation by the SEC regarding compliance with certain record-keeping requirements for business-related electronic communications on unapproved channels.”
The disclosure, at the time, was among the first by a regional bank, indicating the SEC and CFTC were broadening their scope from an earlier focus on Wall Street players.
Separately, in its filing, Fifth Third said it is cooperating with “several civil investigative demands” from state attorneys general looking into the lending practices of Fifth Third acquiree Dividend Solar Finance and its relationships with third-party installers. One such CID from 17 attorneys general stems from the Chapter 7 bankruptcy filing of installer Pink Energy, the bank said.
The bank warned the matter, or others like it, “may result in material adverse consequences or reputational harm.”
Fifth Third acquired Dividend Solar Finance in May 2022.