As we've written before, if you're going to send confidential information to people who have no business seeing it, putting at risk your own reputation and potentially that of your employer, do so responsibly – i.e., with Snapchat. There's a reason this thing took off as the premier venue for sexting. The images disappear. What's good enough for a teen's nude selfie should be good enough for privileged investment banking data whose dissemination constitutes a financial crime.
Evidently bankers at Jefferies haven't been listening. On Thursday Britain's Financial Conduct Authority fined former Jefferies investment banking MD Christopher Niehaus nearly $50,000 for putting client info on blast using WhatsApp. The offenses occurred “on a number of occasions,” regulators announced, none of which involved a profit motive of any sort.
“The information was shared by Mr Niehaus because he wanted to impress the people that he shared the information with,” the FCA said.
In one instance the banker boasted about how he might be able to pay off his mortgage should a deal be successful. “Wish I could go exercise but waiting for [Client One] — story of my life . . . size will increase significantly if I pull off my deal”, he wrote in one message on May 16.
Some of the boasts were a little more sensitive than others:
One time Niehaus told his friend, who was also a client, at a social gathering in April 2016 that a competitor of the friend was about to complete a rights issue. After the information became public in May, Niehaus messaged his friend and said the client had “c[o]me out with a profit warning” and was “in trouble.”
Niehaus told the FCA he "didn’t know" why he disclosed the information other than he wanted to impress his friends.
The illicit texts apparently came to light during an unrelated investigation, and Niehaus readily admitted to his blunder before resigning.
So yes, the literal crime here was broadcasting privileged information about clients to friends who had no reason to view it. But the real sin was using WhatsApp, of all things, to do it. This was early 2016, mind you, before the sadists at Facebook had rolled out the Snap-slaying disappearing photo feature on WhatsApp. So that option was foreclosed to Niehaus. But Snap wasn't.