Barclays (BARC.L) set aside $200 million to recoup the expenditure in its half-year results on Thursday, joining a number of other European banks feeling the heat from a U.S. regulatory investigation into breaches involving the usage of messaging applications like Whatsapp.
Since the pandemic caused more bankers to work from home, U.S. regulators have intensified their efforts to prevent bank employees from discussing potentially market-moving issues with clients on personal messaging platforms.
Finance companies are required by regulators to maintain extensive records of worker conversations in order to prevent and detect violations like insider trading.
This week, potential charges from the investigation have been put out by Credit Suisse (CSGN.S), Barclays, Deutsche Bank (DBKGn.DE), and asset management DWS, whilst UBS (UBSG.S) also acknowledged that it is under investigation.
They follow Wall Street behemoths Morgan Stanley (MS.N), Bank of America (BAC.N), and Citigroup (C.N), all of which have set aside funds to pay anticipated fines. In December, JPMorgan Securities received a $200 million penalty for numerous violations.
While U.S. regulatory figures have taken the lead in closely examining bankers’ utilisation of unapproved channels of communication, other regulators have hinted that they too will be watching out for bankers who operate remotely. In October, the British Financial Conduct Authority advised businesses that it could visit home-based finance employees if necessary.
According to James Alleyne, the legal counsel at Kingsley Napley, remote working presents substantial issues for bank compliance teams. He continued, saying they certainly anticipate seeing much more involvement from the regulatory figures in that area.
This month, the Commodity Futures Trading Commission (CFTC) & the Securities and Exchange Commission (SEC) reached an agreement in principle to resolve the issue, according to the British bank Barclays. The final fines are anticipated to total $200 million between them and be paid in the third quarter.
Credit Suisse, a Swiss company, set aside $200 million for the issue on Wednesday, while UBS Group, a competitor across the street, said US authorities were inquiring into whether it had properly documented staff conversations.
German financial institution Deutsche Bank (DBKGn.DE) disclosed 165 million euros in increased preparations for regulatory enforcement on Wednesday. It claimed that some of it was used for the messaging probes by the U.S. SEC and CFTC. The bank would not specify the precise amount.
Deutsche’s majority-owned German asset management, DWS, revealed on Wednesday that it has set aside 12 million euros ( roughly $12.23 million).
Earlier this year, Deutsche Bank announced that it was looking into Asoka Woehrmann’s use of email and texting while she was the CEO of DWS.
Having categorically denied all of these allegations in a January statement to analysts, Woehrmann resigned in June following a probe by the prosecution into claims that the fund duped clients about its environmental credentials.
Meanwhile, the SEC was reportedly investigating if Wall Street banks had properly documented workers’ contacts, including emails and text messages, last year, according to insiders who are familiar with the matter.
When most of its competitors had significant declines in the second quarter, Barclays’ financial firm responded well, with income increasing by 35%.
Due to increased levels of activity as customers traded in choppy markets, the fixed income, currencies, and commodities business (FICC) within that division recorded income up 71 percent in the quarter.
The 758 million pound gain from the hedge the bank set up against the price of purchasing back the excessively-issued securities helped to boost the 82 percent increase in equity profits.