Whatsapp usage: $1 billion in fines for Wall Street banks

Following in the footsteps of JP Morgan last December, four other Wall Street banks are to be fined $200 million each for insufficiently controlling their employees' use of personal messaging services such as Whatsapp.

JP Morgan to be sanctioned in December 2021

The verdict fell in December 2021 for JP Morgan: for failing to keep track of the many messages exchanged by its employees on their personal devices via Whatsapp, but also by email and SMS, the American bank had to pay out $200 million.

This amount includes two fines:

  • an initial fine of $125 million imposed by the Securities and Exchange Commission (SEC), the US financial markets regulator;
  • a second fine of $75 million to be paid to the Commodity Futures Trading Commission (CFTC), the regulator of the derivatives market.

JP Morgan is not the only bank in the regulators' sights. In all, 5 major Wall Street banks have been fined $200 million, or are about to receive the same penalty.

5 major Wall Street banks targeted by financial regulators

In addition to JP Morgan, the list includes Bank of America, Morgan Stanley, Citigroup and Goldman Sachs. Morgan Stanley announced that it would have to pay a fine of $200 million when it published its quarterly results, while Bank of America, which has just published its quarterly accounts, has forecast an additional charge of $200 million.

Goldman Sachs, according to Bloomberg, is to include a charge of the same amount in its accounts, and Citigroup announced on July 18 that it had set aside an equivalent sum.

In all, the 5 major Wall Street banks will have to pay out $1 billion for failing to adequately supervise their employees' Whatsapp, e-mail and SMS communications from their smartphones and personal computers.

The rise of telecommuting has blurred the boundaries between the professional and the private, encouraging bank employees to use a variety of communication channels from their personal tools. However, to limit the risks, financial regulators require that a record be kept of these communications, an obligation not met by Wall Street banks.

Some banks protect themselves by simply forbidding their employees to use these communication channels, not hesitating, like HSBC in London, to fire anyone who defies the ban. Others, like Deutsche Bank, hope to avoid fines from US regulators by developing software designed to keep track of these exchanges.