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U.S. regulators have been cracking down on the use of personal
communications platforms by bank staff to discuss potentially
market-moving matters with clients, with the issue gaining
urgency since the COVID-19 pandemic led to more bankers working
from home.
Regulators require finance companies to keep a record of vast
swathes of staff communications to deter and uncover
infringements such as insider trading.
Barclays, Credit Suisse, Deutsche Bank and asset manager DWS
have all laid out potential charges arising from the probe this
week, while UBS has said it is being investigated.
They follow Wall Street giants Bank of America, Morgan Stanley
and Citigroup, which have also all set aside cash to cover
expected fines. JPMorgan Securities was fined $200 million for
"widespread" failures in December.
While U.S. regulators have led the way in scrutinising bankers'
use of unauthorised communications channels, others have
signalled they intend to keep an eye on bankers working
remotely. Britain's Financial Conduct Authority reminded firms
in guidance on home working published in October that it could
visit finance staff at home if required.
Remote working poses "significant challenges" for bank
compliance departments, James Alleyne, legal counsel at Kingsley
Napley told Reuters. "We would certainly expect to see much more
activity [from regulators] in this area," he added.
British bank Barclays said it had reached an agreement in
principle with the Securities and Exchange Commission (SEC) and
the Commodity Futures Trading Commission (CFTC) this month to
resolve the matter, with the final penalties expected to be $200
million between them and paid in the third quarter.
Switzerland's Credit Suisse on Wednesday booked a provision of
$200 million for the matter, while cross-town rival UBS Group
said US regulators were looking into whether it properly
documented communications among staff.
In Germany, Deutsche Bank on Wednesday announced 165 million
euros in additional provisions for "regulatory enforcement". It
said some of that was for the U.S. SEC and CFTC messaging
investigations. The bank declined to say exactly how much.
DWS, the German asset manager mostly owned by Deutsche,
disclosed on Wednesday that it made a provision of 12 million
euros ($12.23 million).
Deutsche Bank earlier this year said that it was investigating
the messaging and email use of Asoka Woehrmann, the DWS CEO at
the time.
Woehrmann, who in January told analysts "I emphatically reject
all these allegations", stepped down in June after raids by
prosecutors over the allegations that the fund misled investors
over its green credentials.
Last year, Reuters reported that the SEC was looking into
whether Wall Street banks have been adequately documenting
employees' work-related communications, such as text messages
and emails.
($1 = 0.9599 Swiss francs)
($1 = 0.9815 euros)
(Reporting by Iain Withers in London and Tom Sims in Frankfurt,
Additional reporting by Lawrence White and Sinead Cruise in
London and Michael Shields in Zurich, Editing by David Evans)
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