Bank of America this week disclosed additional surveillance it says it has placed on traders in recent years amid regulatory action targeting lax supervision at some of the world’s biggest banks.
Last year and in 2014, the Charlotte-based bank was fined by regulators that accused the lender of deficient oversight of employees in its foreign exchange business. On Thursday, in a wide-ranging report on its business standards, the bank highlighted steps it says it has taken to help prevent and detect sales and trading misconduct.
Among the changes, Bank of America notes its sales and trading supervisors are required to review their employees’ electronic communications, including in online chats. Last year, the Federal Reserve faulted the bank for not detecting certain online-chat behavior by foreign exchange traders, including disclosing confidential customer information to traders at other financial institutions.
Bank of America’s traders had also used the chats to discuss strategies that raised potential conflicts of interest, according to the Fed, which fined the bank $205 million as it also imposed fines against other lenders.
Sign Up and Save
Get six months of free digital access to The Charlotte Observer
In its report, Bank of America says it has a ban on multi-user chats involving two or more banks or dealers. In addition, such chats must have a business purpose, the bank says.
The bank also says sales and trading supervisors are required to “escalate” potentially problematic electronic communications. It says it has enhanced routines to hold employees and their managers accountable. Those can include verbal coaching, termination and clawbacks of compensation.
The report does not say exactly when specific changes were made. The bank does cite a 2014 initiative launched by its Global Markets unit to analyze and, where necessary, further enhance sales and trading market practices.
Other large banks in the U.S. and elsewhere have clamped down in recent years on traders’ online chats with counterparts at other lenders, according to media reports. Those changes have come amid global probes into interest rate manipulation and foreign exchange trading practices.
In November 2014, the Office of the Comptroller of the Currency fined Bank of America $250 million to resolve claims it failed to identify or prevent employee misconduct in foreign-exchange sales and trading.
The regulator made the announcement as it also fined Citibank and JPMorgan Chase Bank for “unsafe or unsound” foreign-exchange trading practices. Employee misconduct at all three banks went undetected for years, the OCC said.