Wall Street girds for what's next in WhatsApp probe

Regulators have quizzed more than a dozen other firms about the use of unofficial channels like WhatsApp.

AUG 09, 2023

By Bloomberg

Fines tied to unauthorized communications on Wall Street have topped $2.5 billion, and that’s probably not the last of it.

Filings and media reports show that regulators have quizzed more than a dozen other firms about the use of unofficial channels like WhatsApp, personal texts and email to conduct business.

The list includes some of the biggest names in asset management, private equity and hedge funds, as well as smaller banks, beyond the Big 6 that have already reached settlements.

Who’s on Notice
Company	Source	Agency	Focus
Apollo Global Management Inc.	10-Q	SEC	Electronic messaging channels
BlackRock Inc.	10-Q	SEC	Record retention requirements
Blackstone Inc.	10-Q	SEC	Retention of electronic business communications
Carlyle Group Inc.	10-Q	SEC	WhatsApp, WeChat and similar applications
Citadel	BN	SEC	Unapproved channels
Fifth Third Bancorp	10-Q	SEC, CFTC	Settlement talks underway
Interactive Brokers Group Inc.	10-Q	SEC, CFTC	Records preservation requirements
Invesco Ltd.	10-Q	SEC	Investment advisers
Jones Financial Cos.	10-Q	SEC	Unapproved devices, platforms
KeyCorp	10-Q	SEC, CFTC	Broker-dealer, investment advisers
KKR & Co.	10-Q	SEC	Business-related electronic communications
LPL Financial Holdings Inc.	10-Q	SEC	Personal devices and messaging platforms
Oppenheimer Holdings Inc.	10-Q	SEC, CFTC	Broker-dealer, investment advisers
Point72 Asset Management	BN	SEC	Unapproved channels
Robinhood Markets Inc.	10-Q	SEC, Finra	Brokerage communications
TPG Inc.	10-Q	SEC	Retention of electronic communications
Truist Financial Corp.	10-Q	SEC, CFTC	Broker-dealer, investment adviser, swap dealer
US Bancorp	10-Q	SEC	Broker-dealer, investment adviser
Voya Financial Inc.	10-Q	SEC	Unapproved channels

An inquiry from regulators as they gather facts doesn’t necessarily mean that an enforcement action will result, or even that the recipient is a target for investigators. As some of the filings point out, it’s a wide-ranging “sweep” of the industry, and nearly all of the firms said they are cooperating.

Brokers and investment advisers are required to monitor and save communications involving their business to head off misconduct. When they don’t, regulators say it’s harder to investigate any wrongdoing. Their work is made even more difficult when bankers use messaging tools that delete communications automatically.

The Securities and Exchange Commission said its probe so far has found that “off-channel” communications were pervasive at some Wall Street firms, and it wasn’t just a few low-level rogues. At some companies. the SEC found that senior managers were involved, including heads of groups, managing directors and senior supervisors responsible for overseeing the conduct of junior employees.

[More: Wall Street banks hire WhatsApp cops after being hit with big fines]

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