Hi. I am Aaron Weinman. Some of the world’s largest banks, from Goldman Sachs to Morgan Stanley, will impose nearly $2 billion in penalties on US regulators for failing to adequately monitor their employees’ use of unauthorized messaging apps.
The financial institutions have acknowledged that their conduct violated record-keeping provisions set forth in federal securities laws, the Securities and Exchange Commission said in a press release Tuesday. The SEC hit 11 companies with $1.1 billion in penalties.
At the heart of the matter here is the use by bankers of communication platforms such as Whatsapp or Signal. These are encrypted messaging apps that bankers regularly use to communicate with customers and even journalists.
The Commodity Futures Trading Commission also ordered 11 companies to pay more than $710 million in penalties.
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1. The SEC and CFTC have amassed billions of dollars of misery on Wall Street. The US’s biggest European banks, boutiques and lenders have been caught up in an investigation into the use of unauthorized messaging apps.
Banks are required to monitor employee communications to mitigate inappropriate behavior. Bankers are increasingly turning to unauthorized apps to communicate with their customers.
Whatsapp, for example, is a popular messaging app for bankers dealing with clients based outside the United States. The crackdown has forced many bankers to hand over their phones to their employers for inspection in recent months.
The sanctions come after regulators found that banks failed to prevent employees from communicating internally and externally through unauthorized apps.
The SEC said, however, that banks have begun to improve their compliance policies and procedures regarding the use of unauthorized applications.
Bank of America, for example, has rolled out a new communications policy for merchants and bankers, Insider’s Alex Morrell reported.
Employees said the rules are excessive and hamper personal friendships in the industry.
Check the full story here.
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