The U.S. Securities and Exchange Commission has fined a dozen banks a total of $1.1 billion. The reason: data protection failures. Employees of the financial institutions had previously exchanged information on internal bank matters via WhatsApp.
Failures in communication via messenger services such as WhatsApp are costing more than a dozen US financial institutions dearly. As the U.S. Securities and Exchange Commission (SEC) announced in a statement, 15 banks and brokers must pay a penalty totaling 1.1 billion U.S. dollars.
This did not result in a lengthy court case. After the SEC filed charges, the financial institutions concerned admitted “that their conduct violated the recordkeeping requirements of the federal securities laws.
WhatsApp: Financial institutions admit failures
According to the report, all banks and brokers agreed to pay penalties totaling around $1.1 billion. In addition, they have already begun to improve their compliance policies and procedures to resolve the allegations.
A large number of companies, including Goldman Sachs, Morgan Stanley and Barclays Capital, agreed to pay $125 million each – including a subsidiary of Deutsche Bank. All other financial institutions promised to pay fines of between ten and 50 million US dollars.
Violation of securities law: employees communicated via Messenger
The SEC had already initiated corresponding investigations in October 2021. In the process, the investigators uncovered “widespread communication outside of official channels.”
According to the report, from January 2018 to September 2021, numerous employees of the affected financial institutions communicated about business matters using private devices and messenger services such as WhatsApp. The companies did not retain the majority of these messages. That, in turn, constitutes a violation of the U.S. securities laws.
These failures have deprived the Securities and Exchange Commission of the ability to use communications outside of official channels for various investigations. In turn, the incidents would have occurred at all of the accused companies and at various levels of business – including supervisors and senior executives.
