Wall Street bank hit with fines for using WhatsApp
The world’s biggest Wall Street firm by total revenue, JPMorgan Chase, has been hit with $200 million in fines this week for allowing employees to use personal devices to communicate with clients.
Following probes by the US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission, JPMorgan officially acknowledged that from at least 2015, its Wall Street employees used personal devices to send texts, WhatsApp messages, and emails to communicate with clients on sensitive business matters.
This is a violation of federal law, which requires all financial organizations to keep records on communication with clients so regulators can check whether the firms are violating anti-fraud or antitrust laws.
At JPMorgan, even the managers and senior staff members responsible for compliance with the law were found to have used personal devices to discuss business matters, including investment strategies, client meetings, and market observations, the SEC said on Friday.
The bank will have to pay the SEC $125 million, while Commodity Futures Trading Commission slapped JPMorgan with another $75 million fine.
The bank’s securities department admitted to widespread record-keeping failures, and agreed to pay up as charged, but gave no further comments.
Phone conversations and messages on official company devices and platforms are usually recorded and preserved by financial firms. However, as most of Wall Street started working remotely amid the Covid-19 pandemic, many switched to personal phones and encrypted messaging apps including WhatsApp, Signal, and Telegram to communicate with clients, which makes it much harder for regulators to keep watch.
The investigation at JPMorgan is ongoing. The SEC has also ordered similar probes at other Wall Street firms.
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