When JPMorgan settled cases with the CFTC and SEC late last year over its employees’ use of WhatsApp, some of the details which came out were quite jaw-dropping – one banker had sent 2,400 messages on the encrypted platform to clients and colleagues over the course of a year, potentially in breach of compliance standards. However, we and others noted at the time that this was unlikely to be a JP-specific issue. Now that the SEC investigation has become public knowledge, it seems that it is indeed an industry-wide problem.
As part of the investigation, over 100 phones have been requested from senior individuals at banks across the street. If you’re in investment banking and your WhatsApps haven’t been subpoenaed yet, then you might not be as important as you thought you were.
Bankers under investigation are not, however, taking it well. In many cases, it seems that they didn’t have separate phones for work and their personal life, and so are now in a position previously only enjoyed by people under surveillance in Eastern Germany; the government has got access to their entire social life and is looking through it for evidence of crimes.
The SEC have tried to provide some degree of reassurance. There are apparently safeguards to protect privacy, and they have apparently promised that the threshold for “work related” messages will not include conversations between friends in which a bit of trash-talking or blowing off steam about management (or clients?) is indulged in. For what it’s worth, the Order published in the JPMorgan settlement did respect this principle – despite what was probably sore temptation, the SEC didn’t include excerpts of the juiciest conversations.
On the other hand, industry paranoia isn’t wholly unjustified. Even with the best of intentions, an outside investigator who doesn’t know the context or the people involved can’t always judge what a message really meant. Something as simple as a WhatsApp arranging a lunch could be highly embarrassing if it was shown to a colleague who was intentionally NFI. All manner of interpersonal hand grenades might be about to fly.
Given this, many bankers – particularly those who weren’t quite important enough to be called in for the first wave of phone checks, but who might reasonably anticipate being in the second – might be tempted to delete their messages. Or even accidentally allow their phone to fall into a body of water. Don’t. It didn’t work for Rebekah Vardy and it won’t work for you. You can’t delete everyone else’s half of the conversations – all you can do is make yourself look really suspicious, while simultaneously depriving yourself of any of the evidence you might need to prove your innocence. This whole scandal has blown up because the authorities are concerned about record keeping.