Wall Street Hit With $2 Billion of Fines in WhatsApp Probe (bloomberg.com) 43
US regulators reached settlements with a dozen banks in a sprawling probe into how global financial firms failed to monitor employees' communications on unauthorized messaging apps, bringing total penalties in the matter to more than $2 billion. From a report: The Securities and Exchange Commission announced $1.1 billion in fines and the Commodity Futures Trading Commission disclosed $710 million in penalties in separate statements Tuesday. Those levies -- against firms including Bank of America, Citigroup and Goldman Sachs Group -- combined with JPMorgan Chase's $200 million in fines from December, bring the total to $2.01 billion, making them the biggest penalties ever against US banks for record-keeping lapses.
"Finance, ultimately, depends on trust. By failing to honor their record-keeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust," SEC Chair Gary Gensler said in the agency's statement. "As technology changes, it's even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications."
"Finance, ultimately, depends on trust. By failing to honor their record-keeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust," SEC Chair Gary Gensler said in the agency's statement. "As technology changes, it's even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications."
Bam! (Score:3)
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Oh, come on, we all know they won't pay even one cent of it.
Re:Bam! [Was that the sound of a joke flopping?] (Score:3)
This story is SO ripe for Funny. But this FP looks like a diversionary troll thread...
Of course I can't help with Funny. My focus would be on the insider trading that the morally neutral tools enabled, but I wouldn't be surprised to see that aspect fly completely over the heads of the Slashdot "discussion". But it would have been a tough investigation. I'm confident the smart criminals used burner phones for the insider trading stuff.
So I guess I'll prove my lack of Funny bones with this feeble attempt: "Th
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Do you have evidence of said insider trading, or is that just speculation?
Insider trading is a huge no-no, if those communications had contained such actions it would have been part of the investigation. Maybe some will show up later, who knows. In the meantime, the banks are just sanctioned for failure to keep regulatory records. And yes, people use WhatsApp because it's convenient. Not necessarily because they're up to no good.
On a related note, I'd be curious to hear what the SEC is going to do about the
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And yes, people use WhatsApp because it's convenient. Not necessarily because they're up to no good.
People do, yes.
Wall Street bankers conducting official business? I'm a bit more skeptical of that claim.
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NAK
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Not everyone is dishonest. Dishonest people are actually the exception, not the norm.
You have made a classical statistical mistake, here. You have intense sample bias that has led to this assertion being applicable to this discussion.
For example, a very tiny fraction of the population are murderers.
However, among those who have killed, the vast majority are.
I never said that a majority of Wall Street employees are dishonest (though there's plenty of room for a joke, there)
But I sincerely doubt malfeasance is the minority reason for use of WhatsApp for banking business in Wall Street.
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Re your last phrase, I highly doubt it. No statistical mistake here.
Unless this thread is only about propagating jokes/stereotypes, in which case I'll leave you guys to it.
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These employees are well aware of the regulations that proscribe their activities, as they've been in place since the 1930s, and are literally drilled into their brains before they're federally allowed to do what they do.
This leaves 2 possibilities. Period.
Incompetence, or malfeasance.
I can't see any logical way you can discount malfeasance, while there are at least some reasonable arguments against assuming incompetence.
But ya, I'm sure that Wall Street banker
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Oh, come on, we all know they won't pay even one cent of it.
Oh, they will pay. They tangled with the fucking regulators and that is a fight nobody can win.
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They tangled with the fucking regulators and that is a fight nobody can win.
Until the next elections.
Regulations (Score:2)
Ever read up on how most regulatory agencies work? You go in front of a judge whom is picked by and works for the regulatory agency. If they fine you, you are done. You can appeal to the SEC commission, that's it. As it's an "administrative" action, you aren't breaking the law, and have no protections that criminal courts would afford. It's not a civil action, either, so you can't ask for a different judge or a jury trial.
So, yeah, they are going to pay.
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I guess I am expecting a chorus of complaints about how this is just a slap on the wrist and 'they always get away with it,' but, honestly $2B is not nothing, not even for BofA, Citi, and Goldman Sachs. This is something.
I completely agree. This is not on a level they can just pay from the coffee-pot-money anymore. Of course, executives sent to prison would have been better, but this is a good start.
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Except it was only about $200 million each.
Re: Bam! (Score:2)
So (Score:2)
the SEC just saw the tip of the banking iceberg????
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No, they fined the tip of the iceberg..
I'm confused. (Score:2)
How do they expect these firms to do what they do, enjoy their historical levels of success, and simply ignore law and regulation? Accountability is a boat anchor - if you have to hook it up, do it cosmetically. Make the fluke out of candy.
Sell 30 April at 142 (Score:2)
To paraphrase Charlie Wilson's war (Score:5, Funny)
Is that a joke?
No.
Is that meant to be a funny joke?
No, sir.
Congressman, what they're saying is $2 billion in penalties for Wall Street firms is such a low figure that it can be mistaken for a joke.
Annual training on business communications (Score:3)
Every year all employees at these banks get annual training on why they must only conduct business and engage in business communications on approved firm systems. That if they don't they open the firm to large fines from regulators, reputational damage, and lawsuits.
And then they go and do it anyway. It's insanity.
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As somebody that had to do these trainings (was building and then maintaining a major custom security component for a large bank) I completely agree. These trainings are bothersome, but they are, in the end, just common sense. I managed to pass most by ignoring the training materials and just taking the test. Anybody that fails the ideas in there _this_ badly is just mentally deficient and should never have gotten into their position.
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I know someone who did some of these training.
And I also know that the official communication channels are sucky (at least in this case, the paid for tool they were supposed to use was none responsive often and has other problems) and they are forced to send msgs via other channels asking the person to check an email or the official communication tool.
I guess in this case there is a chance that they did more then asking their colleagues to check official channels and actually discussed things that they were
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I know someone who did some of these training.
And I also know that the official communication channels are sucky (at least in this case, the paid for tool they were supposed to use was none responsive often and has other problems) and they are forced to send msgs via other channels asking the person to check an email or the official communication tool.
I guess in this case there is a chance that they did more then asking their colleagues to check official channels and actually discussed things that they were not supposed to.
I don't really like the finance industry, but I understand that the employees are saddled with stupid tools that they are forced to use which is all crap. Probably the CIO / CTO / whoever got a nice payoff for selecting them as the official tools.
The above is just from my observation and discussion with one individual, who is not working in any of the organisations which have been fined.
I've worked in the industry and done these trainings for years. It doesn't matter how good or bad the blessed tools are, those are the tools you have to work with.
There's just no excuse for this.
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Every year all employees at these banks get annual training on why they must only conduct business and engage in business communications on approved firm systems. That if they don't they open the firm to large fines from regulators, reputational damage, and lawsuits.
And then they go and do it anyway. It's insanity.
Right, and that's why mobile device policies and corporate proxies block access to social media sites and apps.
Obviously there wasn't one outlier but dozens of banks that didn't give WhatsApp the same treatment, and WhatsApp happens to be very popular to communicate with anyone not using an iPhone or international. There isn't some vast conspiracy here, it's popular and few companies considered it to be on the list of restricted things.
How much you want to bet BofA isn't blocking /. either? It's real fuck
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You touch on the main challenge of these log-everything rules - they're essentially impossible to fully comply with and, in the end, still aren't a magical solution.
Sure, it's easy to see if Mr. Broker sends non-public info via his work email and charge him with insider trading. But Mr. Broker also has a work phone that may or may not be recorded. He also probably has a work cell phone and almost certainly a *personal* cell phone which is unlikely to be recorded.
Yes, it's still illegal to use any of those
Good (Score:2)
This may actually do something. Not like the pathetic 23M fine for Oracle. Of course, sending executives to prison would be even better, but I guess we cannot have everything.
Finance depends on trust (Score:2)
"Finance, ultimately, depends on trust.
and maybe that's why it fucks up so spectacularly every 10 to 15 years.
Trusting a financier is like landing a crackhead your wallet and trusting he'll give it back to you intact: he may swear to you he will, and he may even honestly wish he will, but man the temptation to steal the money in it is irresistible.
Re:Finance depends on trust (Score:4, Insightful)
The reality is a bit more complex that what the media spoon-feeds you. To get some perspective, think about your line of work, and think about how you feel about the media's portrayal of topics where you are an expert. Now extrapolate to other fields.
I'll take the '08 crisis as an example. Governments were reckless incentivizing borrowing for home ownership. Central banks were reckless providing cheap money. Mortgage originators were just collecting fees and offloading the risk elsewhere so didn't check creditworthiness of borrowers. Rating agencies had no ideas about the risks of the securities they said were super safe, because they were also in the fee collecting business. Banks also had no ideas about the risk of the stuff they were repackaging and offloading to investors. And finally, finally, individuals borrowed like there's no tomorrow to punt on the real estate market. Just like they punted tulip bulbs, South Sea Company, railroads, pets.com, etc.
All these groups of people and professions messed up. Probably more incompetence that ill intent. And yeah, some people got rich in the process, and some lost. My point is just that saying "finance fucks up" is a bit too broad of a statement.
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You're missing a key fact in the '08 subprime crisis - everyone knew. (at the financial institution level at least)
They bundled high risk debt into CDOs that, by slight of hand, got assigned AAA ratings...these were sold/traded and made billions upon billions of dollars. Practically anyone in the industry, had they stopped long enough to think about what they were doing instead of figuring out how to spend their bonus checks, would have seen it clear as day. I worked for Washington Mutual in the years le
Not enough (Score:2)
Fines are insufficient. Unless they are directly levied against, and paid by, individuals, then the impact they have is minimal because individuals don't suffer the consequences to the degree intended or required to dissuade future assholes from doing wrong. Look at the results of the 2007/8 CDOs fiasco vs the savings and loan crisis in the '80s and how the punishment was meted out, and how long it was before similar level shenanigans were perpetrated so widely. We are seeing exact same behavior as the CDO
Re: Not enough (Score:2)
If you could get thrown in jail just for using whatsapp instead of another app for business communications, you'd probably demand a higher salary to stay in the industry. The result is that either you pay more for the same level of service or pay the same for worse service. Rules aren't free.
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If you could get thrown in jail just for using whatsapp instead of another app for business communications, you'd probably demand a higher salary to stay in the industry. The result is that either you pay more for the same level of service or pay the same for worse service. Rules aren't free.
It's not for using WhatsApp, it's for not keeping copies of all messages. It's not a new rule, it has been the rule for some time. Did you even RTFA?
Perp walk the fuckers.
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If you could get thrown in jail just for using whatsapp instead of another app for business communications, you'd probably demand a higher salary to stay in the industry. The result is that either you pay more for the same level of service or pay the same for worse service. Rules aren't free.
It's not for using WhatsApp, it's for not keeping copies of all messages. It's not a new rule, it has been the rule for some time. Did you even RTFA?
Perp walk the fuckers.
You obviously do not understand the severity of the "crime".
The fine needs to happen and banks should tighten up their corporate IT policies to be less permissive, that's the goal, nobody should go to jail for that.
Re: Not enough (Score:2)
No, it's you who doesn't understand the seriousness of these criminals using unapproved and unmonitored communications to evade regulators' reach in order to evade enforcement. This practice is egregiously widespread, and it needs to be ended. Unless individuals are held accountable, they will continue to flaunt the law.
You've obviously never worked in a highly regulated industry, and are completely ignorant.
They do this stuff willingly (Score:1)