Game-changing Fines: The Transformative Impact on Digital Banking Communications

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As instant messaging apps like Slack gain more prominence in the modern workplace, global banks and regulators are adopting extraordinary measures to monitor and regulate employee communication.

HSBC is implementing a restriction on staff from using texting on their work phones, according to a source familiar with the situation. The ban was initially disclosed by Bloomberg.

This action follows the imposition of fines totaling $549 million on 11 brokerage and investment firms in August by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for their utilization of messaging apps such as WhatsApp.

Banks are required to adhere to stringent compliance regulations regarding the usage and storage of their employees' text messages and other business communications. However, instant messaging apps like WhatsApp can pose significant challenges as they are frequently linked to bankers' personal devices and are not easily monitored by compliance departments for record-keeping purposes.

Financial institutions are concerned about the possibility of additional errors and penalties, leading them to take precautionary measures in restricting how their employees communicate regarding official matters.

A spokesperson from the company stated to CNN that banks utilize various authorized channels for communication in order to adhere to regulatory requirements. They further added that HSBC, along with other banks, regularly evaluates and modifies the features available on their corporate devices as required.

HSBC implemented a text ban shortly after being fined $75 million by the CFTC for engaging in manipulative and deceptive trading and record-keeping failures. Additionally, the bank paid $15 million to the SEC due to its misuse of WhatsApp. Reuters also reported that private equity firms such as the Carlyle Group and Blackstone are allegedly being investigated for using WhatsApp and Signal to discuss business matters.

Lenders such as Bank of America, Wells Fargo, and Citigroup have collectively paid over $2.5 billion in penalties since last year due to recordkeeping violations. These settlements are just a part of a larger crackdown undertaken by regulators, aiming to address the industry's failure in adequately maintaining and preserving electronic communications on personal devices.

The SEC discovered "widespread and long-standing unauthorized communications" at multiple banks.

As per the SEC, the companies being investigated acknowledged that since 2019, their staff frequently used WhatsApp, iMessage, Signal, and various messaging platforms on personal devices to discuss business matters. The SEC further stated that these firms breached federal securities laws by neglecting to preserve or retain the majority of these communications.

"Record-keeping failures, like the ones mentioned, diminish our capacity to effectively regulate and oversee, often at the cost of investors," stated Sanjay Wadhwa, Deputy Director of Enforcement at the SEC. Additionally, the SEC hinted at further potential actions forthcoming.

"We know that other SEC-regulated entities have committed similar violations, and so our work to enforce industry-wide compliance continues," said Wadhwa.

Tesla third-quarter earnings slow, missing forecasts

Tesla's third-quarter earnings fell below Wall Street's expectations, according to Chris Isidore's report. The electric vehicle maker reported adjusted earnings of $2.3 billion, or 66 cents per share, marking a 37% decline from the previous year and its lowest profits in two years. Analysts surveyed by Refinitiv had anticipated a slowdown in earnings but still projected earnings of 73 cents per share.

Tesla fell short of analysts' expectations in the third quarter, reporting revenue of $23.4 billion, a 9% increase compared to the previous year. However, this figure was below the forecasted $24.1 billion. To combat increasing competition in the electric vehicle market, Tesla has been reducing vehicle prices to stimulate sales. This strategy has adversely affected profit margins, prompting questions about when the company will halt these price cuts.

During a call with analysts, Elon Musk, the CEO of Tesla, discussed the influence of increased interest rates on both consumers and the demand for Tesla vehicles. He attributed the price reductions made by Tesla this year partly to the rise in interest rates. "I have concerns about the current high interest rate situation," Musk expressed. "It's important to emphasize that, for most individuals, the decision to purchase a car is largely based on the monthly payment."

He also said unspecified wars are also a headwind for car sales.

"If people are reading about wars all over the world, buying a car isnt front of mind," he said.

Costcos CEO steps down

Longtime Costco chief executive Craig Jelinek will step down at the end of the year, the company said Wednesday.

Ron Vachris, Costcos president and chief operating officer, will replace him.

Jelinek has been Costcos CEO since 2012. The companys stock has increased five-fold during his tenure.

Despite competitors like Amazon and Sam's Club increasing their membership fees, Costco has not raised its membership cost since 2017. However, there have been suggestions that Costco may soon raise its membership price. Currently, Costco operates 861 warehouses globally, with 591 in the United States. In terms of US retailers, it ranks third, following Walmart and Amazon.

Costcos stock was little changed during early trading on Thursday, a sign investors were mostly unfazed.