JPMorgan Chase is paying a $125 million fine to settle allegations by the Securities and Exchange Commission that its Wall Street division allowed employees to use WhatsApp and other platforms to circumvent record-keeping laws. state.
The SEC said Friday in a statement that JPMorgan Securities admitted to “common” recordkeeping failures in recent years. Bank employees used smartphones and personal email accounts, as well as messaging services including Meta– WhatsApp is granted the right, to conduct securities business affairs at least from January 2018 to November 2020, the regulator said.
SEC officials who spoke to reporters Thursday night said JPMorgan’s failure to preserve those offline chats violated federal securities laws and blinded the regulator to the exchange. between the bank and the customer.
Federal law requires financial firms to keep and keep meticulous records of electronic messages between brokers and clients so that regulators can ensure those firms are not circumventing antitrust laws. fraud or antitrust.
Regulators in New York and London have stepped up enforcement of record-keeping rules in recent years as traders turn to encrypted messaging platforms including WhatsApp, Signal or Telegram.
While phone conversations and messages on the company’s official devices and software platforms will be preserved, it will be much harder for banking compliance departments to survey communications. on third-party applications. This method became popular after two of the industry’s biggest trading scandals in the last decade (involving the manipulation of the Libor and forex markets) revolved around incriminating messages. preserved in chat room, resulting in multi-billion dollar fines for banks.
At JPMorgan, going offline for communication is widespread, and even managers and senior compliance officers use their personal devices to communicate business matters. sensitive, the SEC said.
The investigation at JPMorgan is ongoing, and the SEC has launched similar probes at companies around the financial world. JPMorgan ordered its traders, bankers and financial advisors to keep work-related messages on personal devices earlier this year, Bloomberg reported. report in June.
Officials declined to provide details about the current status of the JPMorgan test or those at other banks.
“As technology changes, it is more important for subscribers to ensure that their communications are appropriately recorded and not done outside of official channels to avoid market scrutiny. monitoring,” SEC Chairman Gary Gensler said in a press release.
In stressing the importance of careful recordkeeping, Gensler recalls the 2013 forex scandal, when traders at some of the top banks used private chat rooms with names including including “Convention on exchange of prisoners” plot to fix currency rates to maximize profits.
Five of the world’s biggest banks, including JPMorgan, ultimately agreed to pay more than $5 billion in aggregate fines and plead guilty to settle the investigation.
“The book and record obligations help the SEC conduct its important inspections and enforcement,” added Gensler. “They build trust in our system.”
While SEC officials say the $125 million fine is the largest record-keeping fine to date, the bigger threat to JPMorgan may be reputational. By going after JPMorgan, the world’s largest company on Wall Street by total revenue, the SEC has brought the industry into the spotlight.
Notice limited to one banner week for Gensler, who released on Wednesday a series of proposals aimed at securing money market funds and restrict the ability of executives to trade their own company’s equity.
Taken together, the proposals and implementation actions show the Biden appointee in a sprint to draft and enact one of the most ambitious policy agendas in decades.
Many investors see him as the leader the SEC needs to develop expanded crypto regulation, safeguards around special purpose acquisitions (e.g. SPACs), discloses the standard environment for public companies and rules governing the marketing of online brokerages and the “gamification” of securities trading.
The enforcement action also marks a major milestone for the SEC’s Director of Enforcement, Gurbir Grewal, who has for months warned that stricter enforcement is approaching.
He said in October, restoring public trust in Wall Street would require “robust enforcement of laws and rules regarding forced disclosures, misuse of unfair information, and forced disclosures.” statements, violate recordkeeping obligations, and falsify evidence from the SEC or other government agencies,” he said in October.
In addition to focusing on Wall Street’s accounting, Grewal is also working on ways the SEC can prevent misconduct from happening in the first place, what he calls “contingency” measures.
Specifically, Grewal said he plans to drastically require guilty companies — in this case, JPMorgan — to publicly confess their violations.
“Record-keeping requirements are core to the Commission’s inspection and enforcement programs, and when companies fail to comply with them, as JPMorgan has done, they directly undermine their ability to role in protecting investors and maintaining market integrity,” Grewal said in a statement Friday.
https://www.cnbc.com/2021/12/17/jpmorgan-agrees-to-125-million-fine-for-letting-employees-use-whatsapp-to-evade-regulators.html JPMorgan agrees to $125 million fine for allowing employees to use WhatsApp to evade regulators