JP Morgan fined $200m for using WhatsApp to conduct securities business

The US Securities and Exchange Commission (SEC) has announced charges against the broker-dealer subsidiary of JP Morgan Chase for what it describes as “widespread and longstanding” failures to maintain and preserve written communications.

According to the regulator, JP Morgan Securities (JPMS) admitted that from at least January 2018 until November 2020, its employees regularly communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts. Supervisors, including managing directors and those in other senior roles were found to have used personal devices to communicate about the securities business.

These records were never preserved by the firm as required by federal securities laws.

The US watchdog, which fined the firm $125 million this week, said that JPMS further admitted that these failures were firm-wide and that practices were not hidden within the firm.

The bank agreed to pay the fine and has also committed to implementing improvements to its compliance policies to settle the matter.

JPMS had to pay a further $75 million penalty issued by the Commodity Futures Trading Commission (CFTC) last Friday, also for using texts and WhatsApp on personal devices to conduct business.

“Since the 1930s, recordkeeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be an effective cop on the beat,” said Gary Gensler, SEC chair. “As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight.

“Unfortunately, in the past we’ve seen violations in the financial markets that were committed using unofficial communications channels, such as the foreign exchange scandal of 2013. Books-and-records obligations help the SEC conduct its important examinations and enforcement work. They build trust in our system. Ultimately, everybody should play by the same rules, and today’s charges signal that we will continue to hold market participants accountable for violating our time-tested recordkeeping requirements.”

    Share Story:

Recent Stories

New Business Frontiers
FStech’s Mark Evans discusses the future of financial services with Liu Jianning of Huawei, covering the limitations that current thinking can impose, how financial institutions can embrace technology to be both agile and resilient, and making space for the organisation to focus on the job of creating innovative business models and on delivering business value for their customers.

The Future of Intelligent Finance
FStech Group Editor Mark Evans sits down with Jason Cao, President of Global Financial Services Business Unit, Enterprise BG at Huawei ahead of its Intelligent Finance Summit which was held on 3rd and 4th of June in Shanghai. This Q&A delves into key trends in digital transformation of the financial services industry as well as a look at how data, robotic infrastructure, intelligent storage and innovative technologies are shaping the future for FSIs.

Cracking down on fraud
In this webinar a panel of expert speakers explored the ways in which high-volume PSPs and FinTechs are preventing fraud while providing a seamless customer experience.