Wall Street shops get dinged for nearly $2 billion in penalties for failing to police bankers' use of Whatsapp

Wall Street shops get dinged for nearly $2 billion in penalties for failing to police bankers' use of Whatsapp
WhatsApp; Getty Images; Samantha Lee/Business Insider

Hi. I'm Aaron Weinman. Some of the world's largest banks from Goldman Sachs to Morgan Stanley will cough up nearly $2 billion in penalties to the US regulators for failing to sufficiently monitor their employees' use of unauthorized messaging apps.


The financial institutions admitted that their conduct violated recordkeeping provisions outlined in federal securities laws, the Securities and Exchange Commission said in a press release on Tuesday. The SEC hit 11 firms with $1.1 billion in penalties.

At the heart of the matter here are bankers' use of communications platforms like Whatsapp or Signal. These are encrypted messaging apps that bankers regularly use to communicate with clients and even journalists.

The Commodity Futures Trading Commission also ordered 11 firms to pay over $710 million in penalties.

Let's get into it.


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1. The SEC and CFTC have piled billions of dollars in misery on Wall Street. The largest US banks, boutiques, and European lenders were caught up in a probe around the use of unauthorized messaging apps.

Banks are required to monitor their employees' communications in order to mitigate improper conduct. Bankers have increasingly turned to unauthorized apps to communicate with clients.

Whatsapp, for example, is a popular messaging app with bankers dealing with clients based outside the US. The crackdown has resulted in many bankers having to hand over their phones to their employers for inspection in recent months.


These penalties come after regulators found that banks failed to stop their employees from communicating internally and externally via unauthorized apps.

The SEC has said, however, that banks have begun efforts to improve their compliance policies and procedures around the use of unauthorized apps.

Bank of America, for example, has rolled out a new communications policy to traders and bankers, Insider's Alex Morrell reported.

Employees said the rules are excessive and hinder personal friendships in the industry.

Check out the full story here.


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Wall Street shops get dinged for nearly $2 billion in penalties for failing to police bankers' use of Whatsapp
T.A. Blackburn Law PLLC

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6. A Citadel Securities employee left the market maker for a startup, but he now faces a lawsuit. Vincent Prieur faces a non-compete lawsuit after he joined crypto-trading platform Portofino Technologies.

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  • RBC has appointed Jason Gurandiano its head of US technology banking. He joined the bank in 2015 and was most recently global head of fintech and is a representative on RBC's Crypto Committee, according to a memo seen by Insider. Previously, Gurandiano was head of fintech at Deutsche Bank.
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  • Jens Welter is quitting Credit Suisse less than a year after being named its co-head of global banking. After 27 years with the bank, Welter is joining Citi as its new co-head of European investment banking. He will also chair Citi's consumer and retail advisory business.

Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.