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Smart phones have made life so much more convenient for everyone — well, apart from compliance sheriffs and record keepers at global banks.
HSBC Holdings Plc alerted investors that it was being investigated in the US for its bankers’ use of WhatsApp and other personal messaging services for business purposes.
It put the news in a single line in its 2021 results and declined to give more detail.
This is the latest of several signs of a growing crackdown by US market regulators worried that communications convenience has led to complacency. But this isn’t about finance alone. In an era of greater freedom to work wherever, monitoring messages is going to become an uncomfortable issue for employers and their bosses in many more industries.
Bankers’ use of WhatsApp and similar tools has grown alongside the rest of society, but bankers have serious regulatory responsibilities to track information and record who has had access to private news about companies or pending trades.
Concern about this has been bubbling for years, but the unavoidable switch to remote working for most people during the Covid pandemic over the past two years has sharpened regulators’ attention on communications in financial markets.
Deutsche Bank AG has begun tightening up its rules and monitoring around messaging apps, Bloomberg reported this month, while Credit Suisse last year asked employees for access to their personal mobile phones.
It’s not that banks or regulators think they can block people from quick and easy modern technology, it’s about ensuring that complete records are kept. Banks need to be able to show that inside information has been controlled and procedures for things like risk management were followed — for banks’ own financial safety as well as for preventing wrongdoing.
JPMorgan Chase & Co’s failures to ensure proper records were kept, including among senior bankers, led to $200 million in fines late last year from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission. The SEC said the failures had hindered several investigations.
HSBC, which is being investigated by the CFTC, declined to say whether or not it could face any fines. But Ewen Stevenson, its chief financial officer,
said the bank “obviously†has procedures and requirements governing
staff use of non-official communications.
—Bloomberg