No doubt widespread and certainly not a good idea for oversight, however, the insinuation that all usage was due to employees wanting to avoid oversight isn't correct. Particularly during the pandemic, employees were forced into communicating using messaging software and many prefer to communicate using software with a good user experience.
The messaging software used within banks (e.g. Symphony) is really awful and it is particularly bad when you're no longer able to speak to clients in person.
They should improve the messaging software they use, on top of getting everybody to do the training for the 100th time, etc.
I've worked in finance for a long time, I don't buy this line. People are getting told all the time that they need to use certain tools, they know what the rules are. You can't just set up your own line to clients just because it's convenient.
It's not like everyone is doing illegal stuff just because they can set up WhatsApp either, it's just it's been drilled in so many times, there's no excuse.
One of the big things I was told repeatedly while working for a financial institution is that the appearance of impropriety is, in many cases, just as bad as actual impropriety, and this is why. Oh, you avoided oversight because you wanted to have a better connection with your client? Well, too bad: everyone is now assuming the worst because assuming anything less is how people get away with the worst.
And, frankly, it's hard to assume positive intent. These are bankers, they should know this. If they knew it and did it anyway, then yeah, I'm glad they got hit by the fine and I don't really have any sympathy for the blight of bad chat software.
No, it's correct. There's no reason to use WhatsApp, and all reason not to use WhatsApp, except if you want to avoid oversight.
Working in finance, in general, isn't "good user experience". Compliance manuals (reread yearly!), compliance training (e.g. anti-money laundering even for employees that have no contact with any cash, bank accounts or clients), trading oversight/restrictions, ... But people do it because it is (might be) worth the money.
"All communication must be recorded" is the least of these nuisances. People who avoid it are doing so willingly, for a reason.
Edit: Also, judging by the title, this is next level bad: JPMorgan "letting" means they knew and didn't do anything against it (e.g. fire employees or report them to the authorities). Normally the punishment for these kinds of things is severe, you can easily get "cannot ever work in finance again" by the regulator.
This is incorrect. When you work in a heavily regulated industry such as Finance, everyone knows the basic requirements of official record keeping and process. The industry has a long history of being hit with "slap on the wrist" type fines for things exactly like this ie, using unofficial tools and software to communicate.
The argument the SEC presented however is that it hindered investigations which means it was extreme. There s no excuse dropping an email with the details of the communications out of channel was impossible, even by hiding the fact it was out of channel: after all you could meet the client on premise and discuss the same things with no record and everyone would agree an email memo should be shared.
Here it feels like it became completely normal to take decision completely out of record, and with no way to trace who said what when, no way to defend themselves out of suspicion, which is why we keep records in banks in the first place.
FTA : “Federal law requires financial firms to keep meticulous records of electronic messages between brokers and clients so regulators can make sure those firms aren’t skirting anti-fraud or antitrust laws.”
If you don’t want to follow this law, then don’t text your clients. It’s that simple.
Also, every client has email, which is compliant. Use that. [0]
I’ve worked in finance for years - this is a simple rule (although hard for firms to police).
I work in finance and, for compliance reasons, we've been trying to stamp out employees using WhatsApp but it is basically impossible.
No matter how much we threaten disciplinary action in our handbook, people still use it, they just hide it more. Obviously we have no way of proving it, but we can see people doing it when the office is open. The financial regulator says we should use technology to reduce WhatsApp use - but given it's happening on personal phones, I'm not sure what we're supposed to do. Obviously nobody would accept company spyware on their personal phone.
Is there some solution to this issue that I'm missing?
After further reading I'm torn. This feels like regulatory overreach. The only measure I can think of is supplying a company phone and doing everything possible to encourage people to only use their personal phone for non-business work.
This is up to and including being tolerant of personal use of company phones within reason.
Otherwise, you're hosed. There's really no way to comply. Strangely enough, I'm both in favor of, but abhor this type of regulation.
Yes. White collar insider trading needs this type of draconian control to chart info flow...
Yet yeeech!
It makes me want to puke.
I do not envy you. Godspeed.
(do not work in finance so excuse the dumb question but) if there is this requirement for all employee communications to be tracked for compliance purposes, how are/were face to face meetings recorded? Or just chatting in the corridor? Is that not allowed?
They're required to keep minutes from face to face meetings for compliance. Of course people still talk informally but they need to know to constraint what they talk about in those circumstances. This likely was triggered because some employees were using whatsapp to evade compliance checks on topics that should have been regulated.
This problem is rampant in the military, to the point that orders are now often given over WhatsApp in some cases. There's been numerous security leaks as such, and any internal affairs seem to get out in a matter of minutes, with people forwarding it on to other group chats.
The headline here reads a bit like "person takes mask off to eat a sandwich".
Obviously people use messaging software with their colleagues.
The correct solution is to design systems in which that isn't an issue. If you need to monitor what people are saying at all times then you have far bigger problems.
Either you didn't read the linked article (you generally should, before commenting) or you fail to grasp the issue at hand.
It's a wholly different situation if colleagues were just informally chatting with one and another but they were circumventing regulations that require talk about customers to be documented.
What matters is to they keep record of these whatsapp requests, not that they use whatsapp. If they screeshot all the chats one by one print them and airmail them to the SEC in postcard format, this is still ok. Saying "oh snap we dont know why we traded 5M of this just before a market moving event because we lost employee communication" is not ok.
Accountants, traders, executives, bankers, etc all have strict rules designed to avoid the appearance of impropriety. However, it seems that members of congress are held to a much lower standard.
The beauty of the financial and many others ( see oil, tobacco, cable, health ) industry is that they have a bad reputation but still manage to be politically favored. Once you have achieved the status where your broad reputation doesn’t matter as long you keep political leadership in check you really have won the game.
No, they were fined because bankers must only communicate via channels that are monitored. By using whatsapp, they bypass all the internal and external audit/compliance teams.
unknown. seems like they were being punished because their employees used whatsapp for business communication, not that it was discovered the employees used whatsapp and did something illegal
If WhatsApp encryption can be broken, there is no way the agencies capable of doing so would share it with the lowly SEC. That would be a top level state secret.
The SEC is pretty much a nobody when it comes to 3-letter agencies. See how Elon Musk challenges them publicly and all he got in return was a slap on the wrist.
On a related note, the major issue with the SEC as highlighted by every knowledgeable commenter is that they have a revolving door shared with the same banks and organizations they are supposed to monitor. People leave SEC and join Goldman Sachs or JPM and then when new administrators come in they rejoin the SEC. It’s corruption at an unprecedented level.
Ten times 200m would be 2bn. JPMs revenue is 36bn. So you have to make over 5% of the companies whole revenue just from your WhatsApp account.
And that's just revenue. If the profit margin on your deals was 20% (pretty whopping for banking services) you'd need to bring in 10bn in revenue. That would mean doing maybe $1tn worth of deals.
If you were profiting from from private messaging, it would either be at the expense of your employer or your client. Even if the second case, JP Morgan is taking on reputational risk, so at the very least they wouldn't encourage it.
I don't actually like this dual agency enforcement action at the same time, when Gary Gensler at the SEC was also chair of the CFTC several years before.
Its really clear that he is coordinating this and making it more likely to stick by splitting each cattle prod between the agencies.
[+] [-] lhnz|4 years ago|reply
The messaging software used within banks (e.g. Symphony) is really awful and it is particularly bad when you're no longer able to speak to clients in person.
They should improve the messaging software they use, on top of getting everybody to do the training for the 100th time, etc.
[+] [-] lordnacho|4 years ago|reply
It's not like everyone is doing illegal stuff just because they can set up WhatsApp either, it's just it's been drilled in so many times, there's no excuse.
[+] [-] brendoelfrendo|4 years ago|reply
And, frankly, it's hard to assume positive intent. These are bankers, they should know this. If they knew it and did it anyway, then yeah, I'm glad they got hit by the fine and I don't really have any sympathy for the blight of bad chat software.
[+] [-] tomp|4 years ago|reply
Working in finance, in general, isn't "good user experience". Compliance manuals (reread yearly!), compliance training (e.g. anti-money laundering even for employees that have no contact with any cash, bank accounts or clients), trading oversight/restrictions, ... But people do it because it is (might be) worth the money.
"All communication must be recorded" is the least of these nuisances. People who avoid it are doing so willingly, for a reason.
Edit: Also, judging by the title, this is next level bad: JPMorgan "letting" means they knew and didn't do anything against it (e.g. fire employees or report them to the authorities). Normally the punishment for these kinds of things is severe, you can easily get "cannot ever work in finance again" by the regulator.
[+] [-] DisjointedHunt|4 years ago|reply
[+] [-] xwolfi|4 years ago|reply
Here it feels like it became completely normal to take decision completely out of record, and with no way to trace who said what when, no way to defend themselves out of suspicion, which is why we keep records in banks in the first place.
[+] [-] MR4D|4 years ago|reply
If you don’t want to follow this law, then don’t text your clients. It’s that simple.
Also, every client has email, which is compliant. Use that. [0]
I’ve worked in finance for years - this is a simple rule (although hard for firms to police).
[+] [-] hellbannedguy|4 years ago|reply
[deleted]
[+] [-] sidpatil|4 years ago|reply
[+] [-] johnhenry|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] ourmandave|4 years ago|reply
https://violationtracker.goodjobsfirst.org/parent/jpmorgan-c...
"Oh, $200M? Yeah just stack it over there with the others. 'k thx bye."
[+] [-] walrus01|4 years ago|reply
my response was, paraphrased: "no, you want to know where the actually dangerous criminals are? down near wall street/broad street/beaver street".
[+] [-] cameronh90|4 years ago|reply
No matter how much we threaten disciplinary action in our handbook, people still use it, they just hide it more. Obviously we have no way of proving it, but we can see people doing it when the office is open. The financial regulator says we should use technology to reduce WhatsApp use - but given it's happening on personal phones, I'm not sure what we're supposed to do. Obviously nobody would accept company spyware on their personal phone.
Is there some solution to this issue that I'm missing?
[+] [-] salawat|4 years ago|reply
After further reading I'm torn. This feels like regulatory overreach. The only measure I can think of is supplying a company phone and doing everything possible to encourage people to only use their personal phone for non-business work.
This is up to and including being tolerant of personal use of company phones within reason.
Otherwise, you're hosed. There's really no way to comply. Strangely enough, I'm both in favor of, but abhor this type of regulation.
Yes. White collar insider trading needs this type of draconian control to chart info flow...
Yet yeeech! It makes me want to puke. I do not envy you. Godspeed.
[+] [-] throwaway_2009|4 years ago|reply
It just makes no sense to me on the face of it. What do you do if they have a chat in the pub after work, bug the table?
[+] [-] wfh|4 years ago|reply
[+] [-] nata79|4 years ago|reply
[+] [-] Aromasin|4 years ago|reply
[+] [-] throwaway_2009|4 years ago|reply
Obviously people use messaging software with their colleagues.
The correct solution is to design systems in which that isn't an issue. If you need to monitor what people are saying at all times then you have far bigger problems.
[+] [-] httpsterio|4 years ago|reply
It's a wholly different situation if colleagues were just informally chatting with one and another but they were circumventing regulations that require talk about customers to be documented.
[+] [-] simplezeal|4 years ago|reply
[+] [-] xwolfi|4 years ago|reply
[+] [-] raymondh|4 years ago|reply
[+] [-] known|4 years ago|reply
[+] [-] spaetzleesser|4 years ago|reply
[+] [-] anadem|4 years ago|reply
[+] [-] jeidz|4 years ago|reply
[+] [-] avsmithy|4 years ago|reply
[+] [-] gruez|4 years ago|reply
[+] [-] bidirectional|4 years ago|reply
[+] [-] malshe|4 years ago|reply
On a related note, the major issue with the SEC as highlighted by every knowledgeable commenter is that they have a revolving door shared with the same banks and organizations they are supposed to monitor. People leave SEC and join Goldman Sachs or JPM and then when new administrators come in they rejoin the SEC. It’s corruption at an unprecedented level.
[+] [-] tibbetts|4 years ago|reply
[+] [-] LatteLazy|4 years ago|reply
And that's just revenue. If the profit margin on your deals was 20% (pretty whopping for banking services) you'd need to bring in 10bn in revenue. That would mean doing maybe $1tn worth of deals.
[+] [-] gruez|4 years ago|reply
[+] [-] Aunche|4 years ago|reply
[+] [-] vmception|4 years ago|reply
Its really clear that he is coordinating this and making it more likely to stick by splitting each cattle prod between the agencies.
[+] [-] rp1|4 years ago|reply