(Jan 14): One of JPMorgan Chase & Co’s most senior credit traders has become the latest Wall Street veteran to get swept up in the industry’s concern over the use of WhatsApp.
Edward Koo, who has spent almost 20 years at the firm, was placed on leave as the bank reviews whether he broke its policies by using WhatsApp group chats with colleagues, according to people with knowledge of the matter. The discussions included market chatter, and the probe so far hasn’t indicated any improper activity, according to a person familiar with the investigation. The bank hasn’t ruled out taking action against other members of the group, one of the people said.
A representative for JPMorgan declined to comment, and Koo didn’t respond to requests for comment.
The review may be concluded with no further action being taken, the people said. Still, JPMorgan’s decision to force someone of Koo’s stature off the trading floor while it looks into the matter is indicative of the seriousness with which banks are grappling with the profusion of new communication platforms.
Wall Street banks have a complicated relationship with WhatsApp. Messages on the service are encrypted from start to finish, and can’t easily be monitored by a compliance department, a problem for firms that need to make sure their employees aren’t engaging in illegal activity like fraud or insider trading.
Banks carefully comb through their employees’ conversations through older forms of communication, including phone calls, emails and instant messages, to make sure they aren’t breaking rules. They hang onto those records to refer to if accusations of bad behaviour emerge months or even years after the fact.
Many firms are unsure of how to handle WhatsApp. Employees often use it for talking to friends and coordinating their social lives, which makes it hard for banks to outlaw altogether.
Koo, who trades corporate bonds and credit derivatives, has been at JPMorgan since 2002, according to industry records. Known as one of the bank’s main traders of credit-default swaps tied to individual companies, Koo had been getting an expanded mandate.
He got a bigger role last year under investment-grade trading head Nicholas Adragna, and has also had oversight of fast-growing corners of the market such as portfolio trading.
