Watchdog sends clear message to ex-banker over WhatsApp boast

| Author: Darren Shelmerdine [Member (F/1004)] | Filed under: General News
Watchdog sends clear message to ex-banker over WhatsApp boast

A boastful WhatsApp message has cost a London investment banker his job and a £37,000 fine in the first case of regulators cracking down on communications over Facebook’s popular chat app.

The fine by the UK’s Financial Conduct Authority highlights the increasing problem new media poses to companies that need to monitor and archive their staff’s communication.

Several large investment banks have banned employees from sending client information over messaging services including WhatsApp, which uses an encryption system that cannot be accessed without permission from the user. Deutsche Bank last year banned WhatsApp from work-issued BlackBerrys after discussions with regulators.


High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our T&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.

Christopher Niehaus, a former Jefferies banker, passed confidential client information to a “personal acquaintance and a friend” using WhatsApp, according to the FCA.

The regulator said Mr Niehaus, who had turned over his device to his employer voluntarily, had shared confidential information on the messaging system “on a number of occasions” between January and May last year to “impress” people.

Other bankers have paid a different price for using messaging apps, including Royal Bank of Scotland’s investment bank chairman, Rory Cullinan, who was lambasted when his daughter published a Snapchat he had sent her about being “bored” at work. He quit weeks later.

Several banks have banned the use of new media from work-issued devices, but the situation has become trickier as banks move towards a “bring your own device” policy. Goldman Sachs has clamped down on its staff’s phone bills as iPhone-loving staff spurn their work-issued BlackBerrys.

Bankers at two institutions said staff are typically trained about how to use new media at work, but banks are unable to ban people from installing apps on their private phones.

Andrew Bodnar, a barrister at Matrix Chambers, said the case set “a precedent in that it shows the FCA sees these messaging apps as the same as everything else”.

He added that this may mean the FCA will begin looking at the difficulties of examining communications on some social messaging apps more closely, such as Snapchat, where messages disappear shortly after they are sent by the user.

Information shared by Mr Niehaus included the identity and details of a client, as well as information on a competitor of Jefferies. In one instance the banker boasted of how he might be able to pay off his mortgage should a deal be successful.

“Wish I could go exercise but waiting for [Client One] — story of my life . . . size will increase significantly if I pull off my deal”, he wrote in one message on May 16.

The FCA acknowledged that neither Mr Niehaus nor those he contacted using the app stood to profit and that the information was not shared with that intention. It added that the banker “provided full admissions to the FCA in an early interview” and agreed to settle the matter at an early stage.

Both of these factors, and the fact that the regulator judged that the breach carried little risk to investors or consumers, reduced the size of the penalty.

Mr Niehaus, 49, was suspended from Jefferies and subsequently resigned before the completion of a disciplinary process at the company.

Jefferies declined to comment. Facebook did not immediately respond to a request for comment.

The FCA does not specifically ban WhatsApp or other new media but requires firms to “take reasonable steps to prevent an employee or contractor from making, sending or receiving relevant telephone conversations and electronic communications on privately owned equipment which the firm is unable to record or copy”.

Source: Financial Times

Endorsed by the Law Society

The ABI is the only association in this industry to be endorsed by the Law Society of England and Wales, and included in the Law Society of Scotland's approved Supplier Scheme.

The highest independent professional bodies for solicitors put their trust in us. We’re confident you can do the same.

Law Society logo
Scotland Law Society logo
Thank you, your message has been sent.
A member of our team will be in touch shortly.
Loading...
Working...