Regulators are in the midst of forcing Wall Street banks to undertake a "systematic search" of more than 100 personal mobile phones used by top level traders and dealmakers in hope of undercovering wrongdoing on platforms like WhatsApp.
The SEC has been "sending firms lists of key positions" that are to be reviewed, according to a Wednesday morning writeup by Bloomberg. In some cases, these include people who head up investment banking teams or trading desks.
Employees are being asked to hand over their phones so they can be "examined by lawyers", the report says. The goal of the sweep is to "gauge how pervasively Wall Street professionals use unauthorized messaging platforms to chat with each other or clients" and to determine whether or not business related messages sent via unapproved platforms are being preserved, as they are required to be.
Morgan Stanley, Citi and HSBC are all among the banks who said they're in the midst of dealing with the regulatory inquiries.
The sweep is so complex and spans so much time and data that banks are hiring outside attorneys to help conduct the reviews, using them as intermediaries in an attempt to try and preserve some privacy, the report says.
Regulators are said to only be seeking who who used illicit messaging channels and are not yet focused on message content, the report says.
But the review has been "sending shivers" through the industry, ever since JP Morgan announced a year ago that it was examining some of its employees' use of such apps. Their review led to $200 million in regulatory fines and an admission that they were not monitoring business related messages on external channels.
"Unfortunately, in the past we've seen violations in the financial markets that were committed using unofficial communications channels," SEC Chair Gary Gensler said..
Other banks have followed JP Morgan's example, reviewing use of such apps. Deutsche Bank, for example, warned staff earlier this year not to delete communications from platforms like WhatsApp.
Editor's note: The Securities & Exchange Commission should have audited their members' telecommunications infrastructures for leaks, decades ago.
What took them so long? They should have done it in 1999. Heck, stock brokers were using text pagers all the way back in the 1980s, so, really, they should have done this forty years ago. It's not too hard to figure out why the SEC was playing stupid - because they are corrupt. Either that ... or, they're stupid.
You think I'm joking? When I worked at Charles Schwab, in 1993, on the AFS project, I met this fellow, named Craig Newmark, who was project leader for software that allowed authorized individuals to view the huge wall-mounted boards on the actual trading floor - he and his small crew actually had real-time video feeds, all day, every day, right on their desktops, of what was hot, and what was not, in the stock-trading world ... confidential and time-sensitive information that some people would have paid millions of dollars for. My sense is that this confidential feed was provided to the executives of the firm, as a sort of bonus.
Not long after this event, Craig Newmark began buying million-dollar San Francisco properties and became a big-time landlord - presumably with his salary, from Schwab - and became insanely wealthy and started a website called Craigslist. Was Schwab's trading floor security being breached by its employees? I don't know. I was just a contractor. But I wondered. I still do.
Want another story? I was working at Hambrecht & Quist, in 1998 or 1999, when H&Q handled Yahoo's IPO, and I was told by a member of the Help Desk that if I wanted a free share of Yahoo stock, that Yahoo was giving away one thousand free shares - one to each of the first one thousand people who logged in.
The value of one share of stock was trivial, at the time, but the importance of the information is in the recognition of the fact that, almost surely, nobody outside of the stock-trading industry ever benefitted from this generosity, I am confident that every single one of those one thousand shares was hoovered up by someone who came into possession of confidential information, as a result of confidentiality being breached.
Bringing this topic closer to home, I'd like to point out that Humboldt County should, similarly, take control of their employees' cellular telephones, if they have not - audit what is installed, identify what is work-related, remove what is not work-related, lock the phones down so new software cannot be installed, and log both telephone calls and SMS text messages to insure that the device is being used for work-related tasks only.
No more Facebook during work hours - conspire and gossip on your own time, please. Imagine the productivity boost we would see! This would be a responsibility for the Information Technology Department to undertake.
If the county had done this five or ten years ago then they never would have had any of those embarrassing Eureka PD text messages popping up in newspapers and there would have been no need for an expensive investigation, that is probably still ongoing, today.