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Banks WhatsApp fine overview:
- Who: The Securities and Exchange Commission and Commodity Futures Trading Commission have reached a combined $1.8 in settlement agreements with more than a dozen banks, including Goldman Sachs and Bank of America.
- Why: The settlements resolve claims the financial institutions failed to properly monitor the communication of their employees, who were allegedly using personal devices and messaging apps like WhatsApp to discuss work-related matters.
- Where: The SEC and CFTC regulate banks nationwide.
A combined $1.8 billion in settlements have been reached with 15 broker dealers and an affiliated investment adviser accused of failing to prevent their workers from using unauthorized messaging apps—such as WhatsApp—on personal cell phones to discuss work-related matters.
The Securities and Exchange Commission and the Commodity Futures Trading Commission argued the banks—including Bank of America and Goldman Sachs, among others—were in violation of federal securities law, reports Yahoo! Finance.
The SEC and CFTC—which collected a total of $1.1 billion and $710 million in fines, respectively—say the banks were violating recordkeeping provisions by not properly monitoring their workers’ communications.
“The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws,” said SEC Chair Gary Gensler, in a statement.
Barclays Plc, Bank of America, Citigroup, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs, Morgan Stanley, and UBS Group AG agreed to pay $125 million each to resolve the SEC’s probe, reports Bloomberg.
Nomura Holdings Inc. and Jefferies Financial Group Inc., meanwhile, agreed to pay $50 million each to end the SEC probe, while Cantor Fitzgerald LP agreed to pay $10 million.
SEC chai says banks failed to ‘honor’ recordkeeping obligations
“Finance, ultimately, depends on trust,” Gensler said. “By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust.”
The settlements resolved months of negotiations between regulators and the banks accused of using their personal e-mail addresses or communication apps such as WhatsApp for work-related conversations, reports Bloomberg.
“As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications,” Gensler said.
JPMorgan had been the first bank to announce that they had reached a settlement agreement, back in December, while Morgan Stanley had said in July that they were nearing a settlement worth $200 million, reports Bloomberg.
Last month, JP Morgan and Goldman Sachs were among a group of major banks opposing class certification for a group of investors arguing they worked together to kill competition in the market for stock loans.
Do you believe the banks were not properly monitoring the communications of their employees? Let us know in the comments!
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