SEC reportedly checking bankers’ cellphones in Wall Street messaging probe

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The U.S. Securities and Exchange Commission has launched a search of more than 100 personal cellphones of top Wall Street traders as it expands its investigation into secret messaging through platforms such as WhatsApp, according to a Bloomberg report on Wednesday. .

The SEC is targeting up to 30 top bankers and traders at each major bank it contacts to provide personal mobile devices for review by attorneys, Bloomberg reported, citing people familiar with first-hand knowledge of the requests.

The SEC is trying to shed light on how Wall Street traders are using unauthorized messaging platforms to communicate with each other.

Regulators under SEC Commissioner Gary Gensler will then assess whether to levy fines or take other disciplinary action against banks for failing to take steps to preserve business-related messages. .

The report does not specify which banks received the requests, but Morgan Stanley MS,
-1.42%,
Credit Suisse AG CS,
+3.70%,
Goldman Sachs Group Inc.GS,
-1.82%,
Citigroup Inc. C,
-0.79%,
and HSBC Holdings Plc HSBC,
-2.09%
all revealed that they were working with regulators on messaging requests.

Banks have brought in outside attorneys to help conduct reviews of cellphone records and to act as intermediaries to maintain the confidentiality of personal messages as opposed to messages deemed directly related to official company business , according to the report.

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In the case of Goldman Sachs, the company first said in its fourth quarter filings and again in its first quarter filings that it was working with the SEC and the Commodity Futures Trading Commission on an investigation and a review of the maintenance of communication logs.

“The Company is cooperating with the SEC and the CFTC and producing documents in connection with investigations into the Company’s compliance with record retention requirements relating to commercial communications sent through electronic messaging channels that have not been approved by the company,” Goldman said in its filings. . “The SEC and the CFTC are conducting similar investigations into record-keeping practices at other financial institutions.”

In December, the SEC said that JPMorgan Securities, a brokerage subsidiary of JPMorgan Chase & Co. JPM,
-0.35%,
agreed to pay $125 million to resolve charges that it failed to retain written communications from its employees.

The CFTC also ordered JPMorgan to pay a civil penalty of $75 million and to cease and desist from further violations of recordkeeping and monitoring requirements, and to enter into specified remedial undertakings.

Following the findings of its investigation into JPMorgan, the SEC said in December that it had launched additional investigations into record-keeping practices at financial firms.

An SEC spokesperson declined to comment on MarketWatch.

The selected financial sector XLF SPDR ETF,
+0.29%
fell 14% since the start of the year, while the S&P 500 SPX,
+0.22%
fell 16%.

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