Posted Sep 28, 2022, 8:08 AM
Using their personal messaging or WhatsApp from their phones has cost Wall Street bankers dearly. Citigroup, Goldman Sachs, Deutsche Bank, UBS and others paid $1.1 billion in penalties for “failing to maintain or preserve the vast majority of these communications made outside of official channels, in violation of securities laws”, announced Tuesday the Securities and Exchange Commission (SEC), the policeman of the American markets. The agency in charge of regulating the futures markets, the CFTC, for its part announced separately that it had recovered 710 million dollars.
Institutions carrying out transactions on the markets are expected to keep all communications relating to their activities. But employees have tended to increasingly use their own WhatsApp, Signal or email account to chat with co-workers, especially during the pandemic.
16 establishments targeted
The largest US bank by assets, JPMorgan Chase, had already agreed at the end of 2021, for similar reasons, to pay a penalty of $125 million to the SEC and another of $75 million to the CFTC. The investigation at JPMorgan had led to the launch of investigations at other financial institutions. A total of 16 establishments, including five subsidiaries, are therefore concerned.
Bank of America will pay $225 million. Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS agreed to pay $200 million each. Nomura, Jefferies and Cantor Fitzgerald will pay 100, 80 and 16 million respectively.
At all levels of the hierarchy, the financial authorities criticize these establishments for having let their employees communicate frequently on subjects relating to their work via their personal devices, without having put in place systems to store their messages.
“Market Integrity”
By not keeping these exchanges, the establishments “probably deprived the SEC of these communications outside official channels in various investigations”, underlines the agency which carried out the investigation.
The companies have acknowledged the facts. Several of them had already indicated that they were negotiating with the authorities and had set aside money to pay penalties. They have also begun revising their compliance policies and procedures, the SEC says.
“In finance, everything is ultimately based on trust. By failing to meet their record-keeping and record-keeping obligations, the market participants we charge today failed to maintain that trust,” SEC Chairman Gary Gensler commented, as quoted in the press release. These rules, in force since the 1930s, are “vital to preserve the integrity of the markets”, he recalled.
With Agencies
