Work phones belonging to HSBC employees are said to have been restricted from texting, according to a new report.
In a move to ensure compliance with regulations, at least two major global banks are now recording Zoom calls, according to sources. This development comes as regulators express growing concern over potential penalties related to recordkeeping failures using conferencing technology.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been active in enforcing recordkeeping regulations, with several recent settlements. In December 2021, JPMorgan Chase struck a $200 million settlement with the SEC and CFTC over employees' use of unapproved channels for business-related communications. HSBC faced a similar fate earlier this year, being fined $30 million by the CFTC and $15 million by the SEC for failure to monitor the use of unauthorized messaging apps leading to recordkeeping violations.
HSBC is taking additional steps to address this issue, disabling texting capabilities on company-issued phones. However, workers will still be allowed to text from work phones where texts are archived in a small number of cases.
Claire Garrett, head of the financial institutions practice at Marsh, emphasised the importance of staying up-to-date with these new exposures, stating that firms need to be absolutely up to speed with them. Matthew Nunan, a former head of conduct risk for Europe, the Middle East and Africa at Morgan Stanley, echoed this sentiment, stating that regulators would expect client calls held over Microsoft Teams to be captured.
CFTC Commissioner Christy Goldsmith Romero urged Wall Street to proactively change its practices, stating that it's time for them to stop waiting for an enforcement action before doing so. This sentiment was echoed in the SEC and CFTC's recent actions, with two waves of recordkeeping settlements in recent months. Eleven banks and brokerages, including Bank of America, Citi, Goldman Sachs, and Morgan Stanley, paid a combined $1.8 billion to settle recordkeeping violations in September 2022.
Regulators have made it clear that the issue is not just about the ability to record calls, but also the retention and production of relevant business records, however they are made. This development underscores the importance of banks and financial institutions ensuring they have robust recordkeeping practices in place to avoid potential penalties and maintain compliance with regulations.
