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JPMorgan hit with $200M in fines for letting employees use WhatsApp

• jeidz 5y ago
  Does this mean that WhatsApp is secure or that this particular agency didn’t care enough to break the encryption?
  • avsmithy 5y ago
    No, they were fined because bankers must only communicate via channels that are monitored. By using whatsapp, they bypass all the internal and external audit/compliance teams.
  • gruez 5y ago
    unknown. seems like they were being punished because their employees used whatsapp for business communication, not that it was discovered the employees used whatsapp and did something illegal
  • bidirectional 5y ago
    If WhatsApp encryption can be broken, there is no way the agencies capable of doing so would share it with the lowly SEC. That would be a top level state secret.
    • paganel 5y ago
      On top of that I assume that the NSA (mostly) still has a PRISM-like programme in place, it would be foolish to assume otherwise. More exactly I do think that they (NSA and some other agencies) still have direct access to the servers of Google, MS, Facebook and Apple. But I 100% agree with you, such lowly use-cases like the SEC chasing some bankers don't register on NSA's (and similar agencies') radar, it's only money, after all, I think they're more interested in dealings involving power itself.
  • malshe 5y ago
    The SEC is pretty much a nobody when it comes to 3-letter agencies. See how Elon Musk challenges them publicly and all he got in return was a slap on the wrist. On a related note, the major issue with the SEC as highlighted by every knowledgeable commenter is that they have a revolving door shared with the same banks and organizations they are supposed to monitor. People leave SEC and join Goldman Sachs or JPM and then when new administrators come in they rejoin the SEC. It’s corruption at an unprecedented level.
    • shukantpal 5y ago
      > See how Elon Musk challenges them publicly and all he got in return was a slap on the wrist. Publicly challenging them is not illegal or even bad so that seems reasonable.
    • xwolfi 5y ago
      He got much more than a slap on the wrist, he go removed from his chairman incestuous position from Tesla. It's the first red flag of bad governance when the CEO is also the chairman (others are to have the board full of family members and overly paid sycophants, I let you google who s on Tesla board). This will eventually be the starting point of a very slow reform at Tesla, so not a bad deal.
• sidpatil 5y ago
  Title from article: "JPMorgan hit with $200 million in fines for letting employees use WhatsApp to evade regulators' reach"
  • deleted 5y ago
    [deleted]
  • johnhenry 5y ago
    Without the regulation part, the titles makes it seem like an easily dismissible bureaucratic issue.
    • kolbe 5y ago
      That's exactly what this is. Bear in-mind that the SEC wrote this title. It was never litigated in court. The fact is that some JPM employees used WhatsApp, and the SEC hasn't the slightest clue what they were talking about. WhatsApp is the most-used communication medium in the world, and JPM employees, as people, sometimes need to use it. JPM probably had a rule in-place that said "never use WhatsApp for business communication," and the SEC has decided that rule isn't enough, and they want to de facto ban all broker dealer employees from using the most important messaging system in the world.
      • johnhenry 5y ago
        I'm talking about the title of the article -- the one written by CNBC.
• tibbetts 5y ago
  I’d be pretty embarrassed if I was JPMorgan and I hadn’t profited at least ten times that much from illicit private messaging.
  • gruez 5y ago
    What type of illegal activities were they doing that generated $2B in profits over 2 years?
    • overcast 5y ago
      Insider trading, market manipulation, every trick possible?
    • tibbetts 5y ago
      I certainly don’t know. Maybe they didn’t, in which case it’s embarrassing.
  • Aunche 5y ago
    If you were profiting from from private messaging, it would either be at the expense of your employer or your client. Even if the second case, JP Morgan is taking on reputational risk, so at the very least they wouldn't encourage it.
    • dundarious 5y ago
      JP Morgan is _notorious_ for profiting at the expense of their clients, even to the extent of calling clients names in internal communications when they're selling them "solid investments" that they know are junk. They've been charged with 5 felonies in the last 7 years or so, always with deferred prosecution agreements and multi-year probation, but enforcement is still rather weak, considering the net profit they've been able to achieve from those actions. And I don't think it's unreasonable to assume that is only the tip of the iceberg. It's a large organization, sure, but at this point one has to ask just how much they "wouldn't encourage it" or how much do they actually institutionally discourage it.
  • 5y ago
• lhnz 5y ago
  No doubt widespread and certainly not a good idea for oversight, however, the insinuation that all usage was due to employees wanting to avoid oversight isn't correct. Particularly during the pandemic, employees were forced into communicating using messaging software and many prefer to communicate using software with a good user experience. The messaging software used within banks (e.g. Symphony) is really awful and it is particularly bad when you're no longer able to speak to clients in person. They should improve the messaging software they use, on top of getting everybody to do the training for the 100th time, etc.
  • hellbannedguy 5y ago
    Old slick Jamie Diamond knew exactly why his guys were using Whatsapp. "Federal law requires financial firms to keep meticulous records of electronic messages between brokers and clients so regulators can make sure those firms aren’t skirting anti-fraud or antitrust laws." I'm shocked they were doing this since 2018. Diamond probally wishes he had this tech when he was an apprentance.
  • brendoelfrendo 5y ago
    One of the big things I was told repeatedly while working for a financial institution is that the appearance of impropriety is, in many cases, just as bad as actual impropriety, and this is why. Oh, you avoided oversight because you wanted to have a better connection with your client? Well, too bad: everyone is now assuming the worst because assuming anything less is how people get away with the worst. And, frankly, it's hard to assume positive intent. These are bankers, they should know this. If they knew it and did it anyway, then yeah, I'm glad they got hit by the fine and I don't really have any sympathy for the blight of bad chat software.
    • ByteJockey 5y ago
      Does this mean that we're training bank employees that "If something looks bad, you might as well do the actual bad thing because the punishment is the same"? Could this have the effect of actually increasing incidents of bad behavior?
• known 5y ago
  "It takes 20 years to build a reputation and five minuted to ruin it. If you think about that you'll do things differently" --Warren Buffett (b. 1930)
  • anadem 5y ago
    An issue here may be that the people involved may think it's better to look clever than to be hide-bound
  • spaetzleesser 5y ago
    The beauty of the financial and many others ( see oil, tobacco, cable, health ) industry is that they have a bad reputation but still manage to be politically favored. Once you have achieved the status where your broad reputation doesn’t matter as long you keep political leadership in check you really have won the game.
    • deleted 5y ago
      [deleted]
• simplezeal 5y ago
  In my last trip to South Asia I was surprised banks using WhatsApp to request identification documents.
  • xwolfi 5y ago
    What matters is to they keep record of these whatsapp requests, not that they use whatsapp. If they screeshot all the chats one by one print them and airmail them to the SEC in postcard format, this is still ok. Saying "oh snap we dont know why we traded 5M of this just before a market moving event because we lost employee communication" is not ok.
• vmception 5y ago
  I don't actually like this dual agency enforcement action at the same time, when Gary Gensler at the SEC was also chair of the CFTC several years before. Its really clear that he is coordinating this and making it more likely to stick by splitting each cattle prod between the agencies.
  • rp1 5y ago
    This would be more convincing if you had specific reasons, unrelated to the enforcement, that JPM shouldn’t be punished for this.
    • vmception 5y ago
      no, I don't, I think Gary Gensler is uniquely dangerous and that the oversight is inadequate. Its not about JP Morgan. Its about him exercising his craftily accumulated power. Would have totally flown under my radar if it was just the SEC for now, or just the CFTC for now. But the simultaneous thing rings the alarms for me.
      • rp1 5y ago
        Normally people say that power is being wielded dangerously when the power is used to do something disagreeable. Simply enforcing the law correctly doesn’t seem dangerous to me.
        • aftbit 5y ago
          More perceptive people separately consider the means and goals. Just because power is currently being used in a way that you agree with does not imply that the power is not dangerous. See "nothing to hide, nothing to fear" and "think of the children" as distractions to keep people complacent while excessive power is accumulated. After that, the excuses become unnecessary and the power can be used for any goal, aligned or unaligned with the people.
          • rp1 5y ago
• ourmandave 5y ago
  JPMorgan has been fined 191 times for over $35B since 2000. https://violationtracker.goodjobsfirst.org/parent/jpmorgan-chase https://violationtracker.goodjobsfirst.org/parent/jpmorgan-c... "Oh, $200M? Yeah just stack it over there with the others. 'k thx bye."
  • walrus01 5y ago
    a few months ago somebody in NYC asked me if I felt unsafe temporarily living in a certain part of Harlem. my response was, paraphrased: "no, you want to know where the actually dangerous criminals are? down near wall street/broad street/beaver street".
    • aredplug 5y ago
      Pithy, but unpersuasive.
    • refurb 5y ago
      This sounds clever but really isn’t.
      • walrus01 5y ago
        I suppose it depends on your opinion about how many of the people responsible for the 2008 financial crisis should have gone to prison, but didn't. Or whether you are old enough to have been an active participant in the economy from about 2000 to 2012. I also wanted to give them an intentionally nonsensical answer , as the origin of their query and conversation seemed to be trending towards a racist dog whistle that I should be extremely concerned for my personal safety in the center of Harlem based on my appearance.
        • refurb 5y ago
          Clearly the question was about physical safety but you thought injecting your views of Wall Street would be a clever way to call out their subconscious racism?
• wfh 5y ago
  (do not work in finance so excuse the dumb question but) if there is this requirement for all employee communications to be tracked for compliance purposes, how are/were face to face meetings recorded? Or just chatting in the corridor? Is that not allowed?
  • nata79 5y ago
    They're required to keep minutes from face to face meetings for compliance. Of course people still talk informally but they need to know to constraint what they talk about in those circumstances. This likely was triggered because some employees were using whatsapp to evade compliance checks on topics that should have been regulated.
    • salawat 5y ago
      ...Admittedly I've been in smaller fintechs where that isn't a problem, but holy hell, why would anyone work somewhere where you couldn't even talk in the hallway? Insane.
• raymondh 5y ago
  Accountants, traders, executives, bankers, etc all have strict rules designed to avoid the appearance of impropriety. However, it seems that members of congress are held to a much lower standard.
• cameronh90 5y ago
  I work in finance and, for compliance reasons, we've been trying to stamp out employees using WhatsApp but it is basically impossible. No matter how much we threaten disciplinary action in our handbook, people still use it, they just hide it more. Obviously we have no way of proving it, but we can see people doing it when the office is open. The financial regulator says we should use technology to reduce WhatsApp use - but given it's happening on personal phones, I'm not sure what we're supposed to do. Obviously nobody would accept company spyware on their personal phone. Is there some solution to this issue that I'm missing?
  • throwaway_2009 5y ago
    Lobby to change the rules because they're ridiculous, or develop a method that makes it impossible for them to get caught? It just makes no sense to me on the face of it. What do you do if they have a chat in the pub after work, bug the table?
    • MR4D 5y ago
      For clarification, a chat in the pub is not “written communication”, and therefore has a different rule. Yes, it’s dumb, and your point stands.
  • salawat 5y ago
    Why exactly is WhatsApp a problem? After further reading I'm torn. This feels like regulatory overreach. The only measure I can think of is supplying a company phone and doing everything possible to encourage people to only use their personal phone for non-business work. This is up to and including being tolerant of personal use of company phones within reason. Otherwise, you're hosed. There's really no way to comply. Strangely enough, I'm both in favor of, but abhor this type of regulation. Yes. White collar insider trading needs this type of draconian control to chart info flow... Yet yeeech! It makes me want to puke. I do not envy you. Godspeed.
    • kolbe 5y ago
      > The only measure I can think of is supplying a company phone and doing everything possible to encourage people to only use their personal phone for non-business work. This also assumes life can be neatly separated into business and non-business.
• throwaway_2009 5y ago
  The headline here reads a bit like "person takes mask off to eat a sandwich". Obviously people use messaging software with their colleagues. The correct solution is to design systems in which that isn't an issue. If you need to monitor what people are saying at all times then you have far bigger problems.
  • httpsterio 5y ago
    Either you didn't read the linked article (you generally should, before commenting) or you fail to grasp the issue at hand. It's a wholly different situation if colleagues were just informally chatting with one and another but they were circumventing regulations that require talk about customers to be documented.
    • throwaway_2009 5y ago
      I disagree that there's an issue, saying that I "fail to grasp" it is needlessly insulting.
• Aromasin 5y ago
  This problem is rampant in the military, to the point that orders are now often given over WhatsApp in some cases. There's been numerous security leaks as such, and any internal affairs seem to get out in a matter of minutes, with people forwarding it on to other group chats.