Posted on Dec 19, 2019 2021 at 14:30Updated Dec 19. 2021 at 16:02
Very practical communication tools in times of pandemic … but not to the liking of American financial regulators. Bank JP Morgan agreed on Friday to pay a total of $ 200 million in fines for not being able to keep track of exchanges between its employees on their personal equipment.
In detail, the Securities and Exchange Commission (SEC) – the policeman of the markets – said in a statement that JP Morgan Securities (the brokerage subsidiary of the banking group) would pay $ 125 million after recognizing that more than one around one hundred employees exchanged professional messages using personal tools. Between the start of 2018 and November 2020, tens of thousands of messages passed through WhatsApp, SMS or personal emails. “None of these messages have been preserved, as required by law,” the SEC said in a statement.
A “very widespread” problem
“As technologies change, it is even more important that participants ensure that communications are properly recorded, and are not conducted outside official channels to avoid market oversight,” the SEC said.
On the same day, the CFTC – the US derivatives regulator – fined JP Morgan $ 75 million for “widespread” use of unapproved communication channels.
The bank was unable to record these exchanges and could not present them to the CFTC when asked to do so, said the regulator for whom the use of SMS or WhatsApp dates back to at least July. 2015. JP Morgan will also need to recruit a consultant to improve its communications retention procedures.
Other targeted firms
Message traceability is a key subject in market trades, in order to counter attempts at manipulation, or quite simply to ensure confidentiality. By promoting teleworking, the health crisis has only accentuated the difficulty, as bankers can now connect from home.
The question is sufficiently significant for the SEC to specify to conduct other investigations of the same type within “other financial firms”. In early December, according to the Financial Times, Credit Suisse asked its employees to be able to access their phones and personal equipment, if these were used to communicate with employees or customers.