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.