Thread by @finshots

Why was JPMorgan Chase fined $200 Mn for Using WhatsApp?

A thread. (1/n)

JPMorgan Chase recently paid a whopping sum of money in fines to regulatory authorities - $200 million. It was caught in the act of…’ using Whatsapp’ to talk business.

Why is that such a big deal?

We know WhatsApp is a great app, but let’s say you’re a huge financial company - now that doesn’t exactly make WhatsApp the ideal route for communication.

And well, talking about trading strategies over the messaging app doesn’t make you a criminal per se. But if you’re JPMorgan Chase, you’re somehow evading recordkeeping laws.

Here’s why - Whatsapp is a (self-proclaimed) encrypted messaging app and whatever communication happens through it, happens unofficially.

It doesn’t get passed into the books of accounts, or in the footnotes in financial statements. It’s a text message. Period.

Back in 2019, JPM’s executive director of the credit trading desk had a crazy idea - let’s take our conversations to a Whatsapp group called “Portfolio Trading/auto ex”.

And the chats on this group were a treasure trove for market buffs - these guys talked about investment strategies, market sentiment, economic trends, client meetings.

Soon enough, the company built a culture of discussing business on Whatsapp with spawning group chats.

JPM now has to pay $125 million to the Securities and Exchange Commission.

And another $75 million to the Commodity Futures Trading Commission for these ‘unapproved’ communications happening since 2015.

The funny thing is - the bank did not do a thing. These were just regular people talking work over Whatsapp.

The rules of the game are simple - if you're a financial company, every business communication has to be recorded in writing.

Even if it's totally harmless information. And that’s how compliance works - ‘not’ following the protocol is tantamount to a crime.

Let us know your thoughts, and make sure you follow @finshots for more crisp financial insights like these! (n/n)