Blog: Banks behaving badly – Insider Intelligence

The news: The Securities and Exchange Commission (SEC) has charged JPMorgan, UBS, and online broker TradeStation with having deficient customer identity programs. Elsewhere, the Consumer Financial Protection Bureau (CFPB) has fined U.S. Bank for opening unauthorized accounts.

Identity verification: The SEC said customer identification programs at JPMorgan, UBS, and TradeStation each violated the Identity Theft Red Flags Rule, or Regulation S-ID from January 2017 to October 2019. Regulation S-ID seeks to protect investors from the risk of identity theft.

  • All three financial institutions were charged with not including reasonable policies and procedures to identify red flags for identity theft through customer accounts. The FIs’ programs also lacked policies and procedures on how to respond to identity theft red flags once they were identified.
  • JPMorgan was also charged with failure to provide effective oversight of service providers and to train staff on how to effectively implement its identity theft prevention program.
  • UBS did not perform periodical reviews on new and existing customer accounts to determine how its identity theft program should be applied to the accounts, nor did it properly train staff on program implementation or include its board of directors in oversight.
  • TradeStation also neglected to include its board of directors in oversight duties and did not exercise oversight of service providers.

All three FIs agreed to cease and desist from future violations, to be censured, and to pay fines of $1.2 million, $925,000, and $425,000 respectively.

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