Earlier this week, a Jeffries Group banker was slapped with a $49,000 fine for using an encrypted messaging phone app to trade confidential client information.
He's not alone – thousands of Wall Street's elite have embraced WhatsApp as an easy and virtually untraceable way to circumvent compliance, get around the HR police, and keep bosses in the dark, Bloomberg reported on March 30.
And the U.S. Securities and Exchange Commission (SEC) is struggling to find a way to crack down…
Exactly What Is WhatsApp?
WhatsApp, owned by tech giant Facebook Inc. (Nasdaq: FB), is an end-to-end encrypted instant messaging app for smartphones. Basically, it allows users to send messages, photos, and videos back and forth that are essentially untraceable.
Once messages are deleted on the app, it's as though they never existed. Some settings even allow users to have the messages automatically deleted after a preset amount of time, similar to how Snap Inc. (NYSE: SNAP) works.
How Encrypted Messaging Is Used on Wall Street
How messaging apps like WhatsApp are used on the trading floor and beyond varies.
"At the big banks, employees will often use such apps to gossip about what they're looking to buy and sell, or even boast about a particularly profitable trade," an employee at a Wall Street firm told Bloomberg on March 30.
This may seem innocent enough, but here's the concern…
A "don't ask, don't tell" mindset prevails in most of these firms, according to Bloomberg – which means employees can get away with whatever they want.