By Stefania Spezzati
LONDON (Reuters) – The UK’s Financial Conduct Authority is scrutinising allegations that some former Credit Suisse employees shared confidential information over the WhatsApp messaging platform, documents seen by Reuters show. The FCA, which regulates financial firms in the United Kingdom (TADAWUL:), is reviewing the conduct of several Credit Suisse staff in its roughly 100-employee London research unit during the period from mid-2022 to early 2023, according to the documents.
The FCA has been assessing and gathering information since the end of February 2023, the documents show. The regulator’s supervisors reviewing the allegations are interested in “potential action”, according to documents dated June 2024, seen by Reuters. In September they were still seeking more evidence, the documents show. An FCA representative declined to comment. A spokesperson for UBS, which rescued Credit Suisse last year, said “it’s unaware of an ongoing FCA investigation of this nature”. UBS has extensive training and rules around the appropriate use of electronic communications and gives analysts work phones, the spokesperson added. More than half a dozen staff are named in the complaint and at least three are currently employed by UBS, according to the documents and a review of their LinkedIn profiles. If the FCA decides it has enough evidence it can open an investigation, which it typically conducts privately without a fixed time frame. The regulator can levy fines against individuals and firms as well as ban professionals from the industry. It can also prosecute individuals for criminal offences.
In 2017, the regulator fined an investment banker for sharing client confidential information over the messaging app, finding that he failed to act with due skill, care and diligence. In September 2022, U.S. authorities fined Credit Suisse $200 million for failing to monitor employee communications on unauthorized messaging apps and ordered the bank to cease and desist from future violations, the lender said in its 2022 annual report. UBS was also fined for similar breaches. In September 2024, the UK regulator asked many banks to hand over details of staff breaching their policies on messaging apps including WhatsApp, Financial News reported. Details of the alleged misuse at Credit Suisse, and how some staff at the bank continued to use existing WhatsApp groups after the U.S. settlement, are reported here for the first time.
The documents show the UK regulator started reviewing the allegations around the end of February 2023, a few days before the Swiss government orchestrated Credit Suisse’s takeover by UBS. The allegations include staff in London communicating business matters on personal devices and sharing price-sensitive information on the messaging platform about the companies they covered. The FCA’s regulatory requirements in place since at least 2021 call for firms to take steps to prevent employees from making, sending or receiving relevant telephone conversations and electronic communications on privately-owned equipment, which the firm is unable to record or copy.
need to keep records of business communication so the regulator can fulfil its supervisory task, the FCA says. Reuters could not establish if Credit Suisse, which employed about 50,000 staff when it was taken over, was keeping a record of the private communications. The FCA is also seeking information on the use of “disappearing messages”, a function which allows users to automatically erase communications after a period of time. Some employees allegedly turned the setting on in early 2023, the documents show. Other allegations under review by the FCA involve four instances over the summer of 2022 in which Credit Suisse employees in the financial research arm recorded conversations with senior executives of four listed companies without previously seeking their consent, potentially breaching rules about selective disclosure. The recordings were shared within the WhatsApp chat used by the Credit Suisse analysts for work, according to the allegations in the documents seen by Reuters.Analysts publish studies on companies to help investors make investment decisions and their assessment can influence the market. In two of the meetings, executives at companies commented on their firms’ capital plan and profitability, the documents show. In one case, an executive of a company covered by the analysts made market-sensitive comments during the firm’s closed period leading up to its financial results.
Company managers are not allowed to share information to select individuals including investors and analysts that could give insight on the firm’s finances in the run-up to reporting earnings. Reuters could not determine if regulators are also reviewing the conduct of the executive who disclosed the sensitive information as part of their inquiries.
