Big bank messaging app crackdown exposes policy holes, monitoring struggles
U.S. financial regulators have signaled through an impending widespread enforcement sweep against Wall Street banks they are zeroing in on employees’ unapproved uses of electronic communication channels to discuss business-related matters. Collectively, the cases emphasize the need for financial services firms to enhance their monitoring and recordkeeping obligations.
Bank of America, Barclays, and Morgan Stanley are among more than a handful of banks to have disclosed agreements to pay as much as $200 million concerning employees’ business communications on unapproved messaging platforms and recordkeeping failures. The fines are expected to be announced by the end of the government’s fiscal year on Sept. 30, according to a report from the Wall Street Journal. Other banks ensnared in the crackdown include Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, and UBS.
Firms cannot realistically prevent all employees from using unapproved channels to communicate off-book securities business matters. “What firms can do is set up reasonable supervisory systems to catch it,” said John Lukanski, a partner at law firm Reed Smith.