A group of Wall Street banks is bracing to each pay up to $200 million to settle cases with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) related to the use of WhatsApp messages.
The banks involved include Bank of America, Barclays, Citigroup, Deutsche Bank, Goldman Sachs, UBS, and Morgan Stanley. They are under investigation for allowing traders and brokers to utilize personal messaging services to discuss investment terms, client meetings, and other business matters.
Using WhatsApp and similar platforms for bank-related communications breaches regulatory requirements. However, the shift to remote work during the pandemic contributed to a rise in the use of these messaging services.
Regulatory authorities have grown increasingly concerned that significant business dealings are occurring via informal communication channels outside of official protocols. This concern has been heightened by allegations that relevant messages have not been archived, complicating regulators’ efforts to investigate potential misconduct and violations.
According to a Bloomberg report, both the SEC and CFTC are poised to intensify their scrutiny of WhatsApp following record fines imposed on banks. The SEC’s focus has sharpened since Gary Gensler became chairman in April 2021, particularly after JPMorgan paid a $200 million fine in December 2021 for similar infractions, which initiated a broader investigation across the industry.
The fines are anticipated to be finalized by the end of September.