US banking giants fined $1 billion for using unapproved apps including WhatsApp
SEC has come down heavy on American Banking giants
The US Securities and Exchange Commission (SEC) has come down heavily on the banking giants of the country. Reportedly, the regulatory body has imposed a collective fine of over $1 billion on JP Morgan Chase & Co and Bank of America.
The fines were imposed after SEC began probing the bank's record-keeping practices and found that the employees were using unauthorised messaging tools such as WhatsApp and email to exchange vital information.
According to SEC officials, it was the failure of the two banking behemoths to preserve the conversations on the unapproved messaging apps that prompted the fine as it violated federal securities law.
This is not the first time that American banks have been given a rap on the knuckle by the financial regulators over the use of personal devices.
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According to a Reuters report, a subsidiary of JP Morgan Chase & Co was caught in a similar manner last year and forced to cough out $200 million in fines. Apart from SEC, it was Commodity Futures Trading Commission that levied the fine on the bank.
Meanwhile,Bank of America, in its second quarter earning report, has already set aside a sum of $200 million to deal with the previous offences. However, the bank might have to increase the amount in light of the new fine.
Similarly,British bank Barclays in July stated that it had reached an agreement with the regulators to settle the case by paying $200 million in fines.
DeutscheBank, Gldman Sachs,Credit Suisse Group and Citi are the other affenders that have had to pay fines to the regulators.
Why American banks keep flouting the rule?
Despite the federal laws explicitly banning the use of personal devices to communicate with clients, American Banks are routinely found flouting the rules.
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In the aftermath of the pandemic, the problem has only exacerbated as most bank employees have become privy to the use of communication tools such as Zoom, and Skype, amongst myriad other tools.
In most cases, it is the natural reflex of employees to use personal channels to communicate. However, some use the back channels as it allows them to circumvent archiving top-secret, market-moving information.
(With inputs from agencies)
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