JPMorgan Chase has received a $125 million penalty from the Securities and Exchange Commission (SEC), for allowing Wall Street employees to use apps including WhatsApp to get around US federal record-keeping laws.
JPMorgan agreed to pay fines last Friday after admitting to “widespread” record keeping failures in recent years. Occurring between 2018 and 2020, employees used WhatsApp, text messages, and personal email accounts to communicate about sensitive business matters. JPMorgan has acknowledged that these failures in record-keeping were firm-wide and such practices were not hidden within the firm.
Gary Gensler, SEC chair, stated: "As technology changes, it's even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight.”
The SEC stated when responding to subpoenas, JPMorgan frequently did not search for relevant records contained on the personal devices of employees.
“JPMorgan’s failures hindered several commission investigations and required the staff to take additional steps that should not have been necessary,” Sanjay Wadhwa, the SEC’s deputy director of enforcement. “This settlement reflects the seriousness of these violations. Firms must share the mission of investor protection rather than inhibit it.”
This is understood to be the largest SEC fine yet for record-keeping violations.
The bank received a further $75 million fine from the Commodity Futures Trading Commission (CFTC) on Friday for using unapproved communications.
In a statement the CFTC said: "Since at least July 2015, JPMorgan employees, including those at senior levels, communicated both internally and externally on unapproved channels, including via personal text messages and WhatsApp messages.”
"None of these written communications were maintained and preserved by JPMorgan, and they were not able to be furnished promptly to a CFTC representative when requested," the statement continued.