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Five businesses were penalized by 8000 crore for employee
Citi, Goldman, BofA in talks with regulators over texting fine

Citigroup C.N, Goldman Sachs GS.N, and Bank of America BAC.N are in discussions with regulators to each pay around $200 million in fines over failing to monitor employees’ use of unauthorized messaging apps, Bloomberg News reported on Friday.

The discussions have yet not concluded and the penalties could still change, according to the report, which cited people with knowledge of the talks.

Morgan Stanley MS.N on Thursday said it had recorded a $200 million expense related to a regulatory matter tied to the use of unapproved personal devices and record-keeping requirements.

Last year, U.S. regulators fined J.P. Morgan Securities $200 million for “widespread” failures to preserve staff communications on personal mobile devices, messaging apps, and emails.

The grand total represents a rare escalation from regulators looking into such an issue, with fines tending to be significantly lower in the past.

The sweeping civil probes rank among the largest-ever penalties levied against US banks for record-keeping lapses, dwarfing a $15 million penalty imposed on Morgan Stanley in 2006 over its failure to preserve emails.

Finance firms are required to scrupulously monitor communications involving their business to head off improper conduct. That system, already challenged by the proliferation of mobile messaging apps, was strained further as firms sent workers home shortly after the start of the Covid-19 outbreak.

In December, the Securities and Exchange Commission and the Commodity Futures Trading Commission imposed $200 million in fines on JPMorgan, saying that even managing directors and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication.

Bank of America and Goldman Sachs spokespeople on Thursday declined to comment. The CFTC and SEC representatives also declined to comment.

The investigations led by the SEC and CFTC may yield even more information because the regulators have also requested information from other businesses like HSBC Holdings Plc and Deutsche Bank AG.

Deutsche Bank warned staff members against deleting messages earlier this year, and according to Bloomberg, the German lender is deploying new software that archives WhatsApp messages on company-issued mobile devices.

The management board members have also consented to pay reductions of about $80,000 each as they accept accountability for the staff’s widespread use of texting and WhatsApp.

In announcing its second-quarter financial results on Thursday, the New York-based bank said the anticipated fine from Morgan Stanley was “related to a specific regulatory matter concerning the use of unapproved personal devices and the firm’s record-keeping requirements.”

JPMorgan’s failures “hampered several commission investigations and required the staff to take additional steps that should not have been necessary,” according to Sanjay Wadhwa, deputy director of enforcement at the SEC, when the bank’s fine was announced.



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