SEC Is Close to Settlements Over Wall Street WhatsApp Messaging Investigation: Report

Federal regulators reportedly are closing in on Wall Street firms whose broker-dealers and investment advisers used WhatsApp and other messaging platforms to conduct official business. 

The Securities and Exchange Commission is close to reaching settlements with roughly two dozen companies that it has been investigating for the misuse of personal messaging apps, Reuters reported, citing two unnamed sources with knowledge of the matter.

As part of the deals, the firms will have to pay hefty fines, with some having to fork up as much as $50 million, admit wrongdoing and hire third-party consultants to remedy record-keeping programs, sources told Reuters. 

Last month, the commission charged 11 firms, including Wells Fargo and BNP Paribas, for violating record-keeping provisions of SEC laws by using iMessage, WhatsApp and other unapproved apps for business. Together, the firms paid $289 million in penalties, bringing the total fines for the SEC’s ongoing crackdown on record-keeping violations in the finance industry to more than $2.5 billion. 

The commission’s sweep began in 2021, after it found that JPMorgan Chase failed to maintain and preserve written communications as required by the SEC. The watchdog has since brought 30 enforcement actions against financial giants like Deutsche Bank, Barclays and Citigroup.

It has since ramped up its investigation, collecting thousands of messages from staff at more than a dozen major investment companies, Reuters first reported.

According to Reuters, the SEC is expected to announce a handful of settlements before Sept. 30, the end of its fiscal year. 

While it is not known exactly which firms are being probed by the SEC, at least 16 have disclosed investigations into their communications in regulatory filings, including Truist Financial Corp, US Bancorp, and Interactive Brokers, as well as Miami-based hedge fund Citadel.

Citadel has said it may fight SEC chief Gary Gensler if his staff brings charges and would even sue the government to block actions, Bloomberg first reported Wednesday.