US Bank JPMorgan Fined $200M Over Employees’ WhatsApp Use
JPMorgan Chase, America’s biggest bank, has been fined for the nth time. This time, it’s over the bank’s employees using…
JPMorgan Chase, America’s biggest bank, has been fined for the nth time. This time, it’s over the bank’s employees using personal messaging apps, including WhatsApp, to discuss business matters in violation of federal laws that demand record-keeping of employee conversations for compliance purposes. JPMorgan was fined $125mn by the US Securities and Exchange Commission (SEC) and $75mn by the Commodity Futures Trading Commission (CFTC), totaling $200mn.
- Big banks and big fines are no strangers to each other. For example, records show that JPMorgan paid over $1bn in fines last year for various violations and has paid nearly $36bn in fines since 2000. The bank declared $29bn in profits last year, so the fines don’t seem to hurt the company much.
For this case, the SEC and CFTC alleged “widespread” failures by JPMorgan’s employees to maintain and preserve written communications by discussing business matters on messaging apps such as WhatsApp, text messages, and personal e-mail accounts, where it’s difficult to keep records. Some compliance staff, the people whose job is to ensure record-keeping, also participated in the violations.
Federal law requires record-keeping of business communication at banks like JPMorgan to ensure they aren’t violating anti-fraud or antitrust laws. JPMorgan admitted to the alleged violations and agreed to pay $200mn in fines.
- On the SEC’s part, JPMorgan admitted to violations from 2018 through 2020. The SEC requested information in ‘numerous’ investigations but failed to get them because of the bank’s lax record-keeping, affecting the agency’s ability to perform its tasks.
- On the CFTC’s part, JPMorgan admitted to violations since at least 2015. As part of its settlement with both agencies, the bank will hire a compliance consultant and brush up on its practices. Earlier this year, Bloomberg reported that the bank ordered staff to hand over private business communications on personal phones and messaging apps going back to 2018.
- The significant fines JPMorgan will pay come with a rare admission of wrongdoing from the bank. In many previous cases where the bank paid substantial fines, it neither admitted nor denied wrongdoing.
While JPMorgan is no stranger to fines, this is the bank’s first in this year. Relatively, the penalty is peanuts for a bank that declared $11.7bn in profit in just the three months ended September.
JPMorgan’s stock (NYSE: JPM) closed down 2.3% on Friday. The bank has a market capitalization of $463bn.