For years, bankers and buysiders assumed that moving away from conventional messanging services like AOL or the ubiquitous Bloomberg Chat to discuss confidential information, would spare them the attention of regulators and enforcers. That, however, changed today when the UK regulator, the Financial Conduct Authority imposed a fine of £37,198 on a former Jefferies banker for sharing confidential client information over WhatsApp. "The FCA found that Mr Niehaus failed to act with due skill, care and diligence."
According to the FCA announcement, Niehaus, who was a managing director at Jefferies, received client confidential information and, on a number of occasions between 24 January and 16 May 2016, shared that information with both a personal acquaintance and a friend, who was also a client of the firm.
In one of the instances where Mr Niehaus shared client confidential information with his friend, who was also a client of the firm, that information was about a competitor. Mr Niehaus used the instant messaging application WhatsApp to share this information. The information was shared by Mr Niehaus because he wanted to impress the people that he shared the information with.
The details of the information he shared included the identity of the client, the details relating to the client mandate and the fee Jefferies would charge for their involvement in the transaction. Mr Niehaus also boasted about how he may be able to pay off his mortgage if one of the deals was successful.
Niehaus provided full admissions to the FCA and was given a 15% reduction to the financial penalty, the FCA announced. Niehaus also agreed to settle during the stage 1 settlement period; but for this, the FCA would have imposed a penalty of £53,140.
Now if regulators shift their attention to the Mecca of confidential banker data "sharing", Snapchat, they would promptly refill any outstanding budget gaps.