On Wednesday, a Bloomberg report revealed that the Securities and Exchange Commission is requesting more than 100 personal cell phones from Wall Street executives and employees. The phone turnover is part of an ongoing investigation into record keeping and communication at big banks. And the people are not taking it well, according to three anonymous sources that Business Insider reportedly spoke to.
“I think it’s complete bullshit,” an unnamed senior banker in New York reportedly told Insider. “You trust me to sign billion-dollar credit agreements, but you don’t trust me to communicate properly. Give me a break.”
Another said, “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,” according to Insider. “Going through every single text, group chat, you might find something you don’t want to see in the papers.”
A third unidentified banker told the outlet, “People are livid,” and further called the investigation an “invasion of privacy.”
On one hand, the anger is very understandable. If Gizmodo writers suddenly had to hand over all their texts to the federal government, we’d probably be upset, annoyed, and concerned. It feels like something that shouldn’t generally be allowed. On the other hand, extremely wealthy and powerful bank execs are hard to root for and there is likely a lot of stuff worth investigating in their text and chat history. It’s both a broad and worrying use of federal power, and a tiny violin moment.
The SEC probe extends to multiple banks. Most recently, on Thursday, Deutsche Bank AG admitted to being one of the banks under investigation in the bank’s annual meeting, as reported by Bloomberg. Other banks likely facing SEC scrutiny are Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., HSBC Holdings Plc, and Credit Suisse Group AG who have all disclosed they’re in the midst of inquiries from federal regulators.
The SEC did not immediately respond to Gizmodo’s request for comment or for the commission to confirm the banks involved.
The aim of the investigation is to assess how often Wall Street-ers use unauthorised chat platforms like Whatsapp to discuss business with each other and clients, that then result in the loss of communication records. And it’s not the first time the SEC has looked into the problem.
In December 2021, a SEC review and Commodity Futures Trading Commission investigation at JPMorgan revealed the company wasn’t keeping tabs on business-related communications happening via text and other external channels. That revelation led to official charges, $US200 ($278) million in total regulatory fines, and the firing of multiple executives.
And, even earlier, in October 2021, the SEC opened a general inquiry into how Wall Street was keeping track of employees’ digital communications, according to a report by Reuters.
“Since the 1930s, record keeping and books-and-records obligations have been an essential part of market integrity and a foundational component of the SEC’s ability to be an effective cop on the beat. 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,” said SEC Chair Gary Gensler in a 2021 statement about the JPMorgan charges.
“Record keeping requirements are core to the Commission’s enforcement and examination programs and when firms fail to comply with them, as JPMorgan did, they directly undermine our ability to protect investors and preserve market integrity,” said the SEC’s enforcement director, Gurbir Grewal, in the same press release.
As the newest investigation proceeds, banks are trying to save their execs at least some embarrassment. To try to maintain the illusion of privacy surrounding personal texts and “office banter”, the banks are bringing in external reviewers, according to Bloomberg. The reviewing lawyers have been instructed to look for “business-related messages,” and to focus on the overall number of messages from each source as opposed to the messages’ content.
Which is bad news for Gizmodo, because an article titled “Top 10 Worst Wall Street Bro WhatsApp Messages,” would probably do huge numbers on the site.