During a tense meeting over allegations that JPMorgan executives routinely shirked surveillance duties by tapping out work communications on personal messaging platforms and email, SEC officials said previous fines shouldn’t serve as guideposts for the penalty the bank would have to pay to settle the case.
Enforcement Director Gurbir Grewal said past punishments hadn’t gotten banks to take recordkeeping seriously enough, according to people familiar with the conversation.
The irregularities included “records preservation requirements applicable to broker-dealer firms, swap dealers and futures commission merchants,” according to JPMorgan’s 2021 annual report.
The CFTC said in December it became aware of such breaches at the lender as it conducted a separate “investigation into certain of JPMorgan’s trading,” without providing further details.
Despite believing that their actions had been less severe than those uncovered at US competitors, executives at some European banks decided to try to settle as soon as possible, two people familiar with the matter said.
The regulators have taken the view that any use of personal devices for business communications is problematic, they said.
Beyond planning to pay hefty fines, some banks have already let go traders for improperly exchanging information on personal mobiles. HSBC Holdings Plc, which said in February it was facing a U.S. probe over the issue, recently fired a trader in London after scrutinizing the personal mobile phones of some staff in relation to the WhatsApp probe.
Fischer, the Moses Singer lawyer, expects more records preservation cases to come from the markets watchdogs as a result of much of the world of finance working from home during the early months of the Covid-19 pandemic and as more companies accept hybrid work.
There will likely be a renewed push at some of the larger banks reminding staff to operate through official channels and preserve records, but that’s unlikely to stop the widespread use of communications apps and personal devices, Fischer said.
Wall Street banks are concerned how realistically they can comply with the records rules “when they really run counter to the way a lot of business is done today,” he said.
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