FCA Investigates Credit Suisse Employees' WhatsApp Communications

By Stefania Spezzati
LONDON (Reuters) – The UK's Financial Conduct Authority (FCA) is investigating allegations that former Credit Suisse employees shared confidential information through WhatsApp. Documents reviewed by Reuters indicate that the FCA is assessing the actions of several staff members in Credit Suisse's London research unit, which consists of approximately 100 employees, during the period from mid-2022 to early 2023.

The FCA began gathering information on these allegations at the end of February 2023. According to documents dated June 2024, the FCA is considering "potential action" against staff members involved. In September, they continued to seek further evidence. An FCA representative declined to comment, while a UBS spokesperson, which acquired Credit Suisse, stated they are unaware of any ongoing investigation. UBS also emphasized its strict training and policies concerning electronic communication.

The complaint names more than seven staff members, with at least three currently employed by UBS. If the FCA finds sufficient evidence, it could initiate a private investigation, which may result in fines or bans for individuals and firms. The FCA may also prosecute criminal actions.

Notably, in 2017, the FCA fined an investment banker for sharing confidential client information via messaging apps. Furthermore, in September 2022, U.S. authorities imposed a $200 million fine on Credit Suisse for failing to adequately monitor employee communications on unauthorised messaging platforms. UBS had also faced similar penalties. In September 2024, the UK regulator requested banks to provide information on staff breaches regarding messaging apps like WhatsApp.

Details of the alleged misuse at Credit Suisse highlight that employees reportedly communicated sensitive business information via personal devices and shared sensitive insights on companies through WhatsApp, even after a U.S. settlement in 2022.

Since at least 2021, FCA regulations require firms to prevent employees from conducting relevant communications on personal devices that cannot be monitored or recorded. Banks are mandated to retain records of business communications to assist the FCA in its supervisory duties. It is unclear whether Credit Suisse maintained records of private communications, which it employed around 50,000 staff before the acquisition.

The FCA is also investigating the use of “disappearing messages” within WhatsApp, as accusations have surfaced that some employees enabled this feature in early 2023. Additionally, allegations include four instances from summer 2022 where Credit Suisse employees recorded conversations with senior executives from four listed firms without obtaining prior consent, potentially violating selective disclosure regulations. These recordings were allegedly distributed within a WhatsApp group used by Credit Suisse analysts.

Analysts produce studies to guide investor decisions, which can sway the market. During two instances, executives shared information concerning their firms' capital strategies and profitability, with one executive making market-sensitive remarks during a closed period leading up to financial reporting. Company executives are prohibited from selectively disclosing financial insights to specific individuals before earnings reports. It remains unclear if regulators are reviewing the conduct of those executives that disclosed sensitive information during their inquiries.