Wall Street execs are "livid" and scared at having to submit their personal cell phones to their employers to satisfy a regulatory crackdown over secretive messaging apps like WhatsApp.
The US Securities and Exchange Commission is asking banks from Goldman Sachs to Credit Suisse to review more than 100 personal phones used by traders and dealmakers. The SEC wants to understand how bankers use unauthorized messaging platforms to communicate with clients and colleagues, Bloomberg reported on Wednesday. Regulators say these apps allow banks to get around rules requiring them to preserve business records, which can make it harder for them to spot bad behavior, like insider trading.
Bankers, however, fear the oversight from lawyers and regulators could expose personal text exchanges with peers, unveil privileged banker-client information, and even chats with journalists, three bankers told Insider. They are complying with the request while blasting it behind the scenes as an "invasion of privacy."
"I think it's complete bullshit," one senior banker in New York said. "You trust me to sign billion-dollar credit agreements, but you don't trust me to communicate properly. Give me a break."
In addition to Goldman and Credit Suisse, Morgan Stanley, Citi, and HSBC have said they're looking into inquiries from the US government into messaging apps. The SEC has also sent a list of positions, including investment-banking heads, that are subject to review, according to Bloomberg.
This latest development comes after Deutsche Bank was asked by German financial watchdog BaFin to reveal how its staff use private messaging services earlier this week. And last December, JPMorgan was fined $125 million by the SEC for allowing its bankers to use Whatsapp, text messages, and personal emails to communicate about business matters that skirted around federal record-keeping laws.
'People are livid'
Some banks, like Citi and Credit Suisse, request their bankers use their own cell phones to conduct work matters, while others, like Canadian Scotiabank, provide execs with a second phone that does not enable the users to download apps like Whatsapp, one of the three bankers said.
A spokesperson for Credit Suisse declined to comment. A spokesperson for Citi could not immediately clarify the bank's procedure around cell phones. A spokesperson for Scotiabank was not available for comment before this article was published.
For those bankers with a single phone, there's a lot of content both personal and professional that are open to scrutiny.
"People are livid," another senior banker said. "While I can see what they're trying to do from a regulatory point of view, it's still an invasion of privacy."
The banks that have received requests from the SEC have appointed lawyers to look for work-related communications. According to Bloomberg, ranting about your colleagues or management would not likely result in punishment, nor would it be conveyed to management.
But the Orwellian nature of the exercise has bankers fearing that anything untoward could be misconstrued or publicized.
"If you're investigating something big like insider trading, fine. But if you're going through every single text with my boss, I have no idea what might pop up, and that's scary" a third banker said. "Going through every single text, group chat, you might find something you don't want to see in the papers."
Bankers have grown accustomed to instant-messaging apps like Whatsapp because it enables them to communicate quickly with peers and clients both domestic and overseas. During the coronavirus pandemic, use of these apps skyrocketed as employees shifted to remote work, Insider has previously reported.
Bankers also love that Whatsapp and rival platform Signal provide encrypted, secure messaging services, which is ideal for execs working on confidential deals.
"There's an immediacy to Whatsapp. I don't check my email as often as I used to now that I chat on Whatsapp," a third banker said (ironically through a Whatsapp phone call). "A lot of banks also don't have things like Slack, which is the closest to texting. And text has become the way of working, for sure."
