Financial

HSBC's WhatsApp trader was fired just before bonus day

15 June 2022

3 minute read

HSBC's WhatsApp trader was fired just before bonus day

It happened again. After Anthony Kontoleon was let go from Credit Suisse for sending clients messages through unapproved channels, Bloomberg reports that an HSBC FX trader has been let go too.

We understand he was fired from HSBC the week before bonuses were announced at the end of January and well before bonuses were paid in February. The investigation had seemingly being running for several months prior to that.

Just as Kontoleon wasn't exchanging inappropriate messages with clients, but was fired simply for using inappropriate messaging channels according to the Financial Times , so the fired HSBC trader's problematic communications reportedly included an innocuous-sounding one-off categorized as, "a chat several years ago with a broker who had bought the banker tickets for a sporting event."

Messaging a client/friend about a sporting event on WhatsApp may not seem outlandish, and it's not clear why this particular trader was let go. The fact that his WhatsApps were seen by compliance suggests that he volunteered them himself to HSBC's compliance team. This may have been foolish: VTB banker Konstantin Vishnyak was acquitted of destroying evidence by a court in London in 2019 after simply deleting WhatsApp. However, Deutsche Bank has warned its staff that deleting Whatsapp messages may be a crime in the US.

As we noted yesterday, the danger for anyone let go after using WhatsApp and other messaging systems is that they not only lose their job, their bonus for the current year and their deferred bonuses. Under UK regulations, bonuses for material risk-takers are subject to clawback provisions for seven years after they were granted. HSBC's compensation report says the clawbacks apply for seven years when individuals are guilty of "failing to meet appropriate standards and propriety."

In this case, therefore, not only did the unfortunate trader lose his bonus for 2021, he stands to lose what remains of deferrals going back to 2014 too. He will also find it difficult to get a new job with a potential regulatory black mark against his name. HSBC declined to comment.

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AUTHORSarah Butcher

Global Editor

1 comments

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pbug56
15 June 2022
Many in the US, UK, EU, etc. are subject to having any business related comms be recorded and monitored by management in their firms. Voice, email, chats, text messaging, etc. are all subject to such rules. Federal governments and states within are looking for things like insider trading, cheating on deals or rates (think LIBOR). So firms use tools such as Bloomberg B Vault to 1. record messaging of many types, 2. automatically point out suspect comms as found by automated keyword searches or to / from pairs, 3. have managers check the alerts, plus scan through messaging regularly, 4. have their managers ensure that the lower level managers are doing their job.
The firms are also looking for misuse of these resources. For instance, going into chat rooms for job hunts, or looking for illicit / illegal items or services. Or just doing things other than work. ANY misuse or crime should lead to discipline up to and including termination and referral to law enforcement.
Not all firms do this well or properly. Hopefully this is found out by their internal audit departments, and corrected. But sooner or later regulatory agencies or law enforcement will learn about issues, and consequences can be severe.
At one firm I worked at, I found that this monitoring wasn't happening. I went to my boss, formerly of IA, and warned him, and he told me what I could do with my warning - until his former bosses from IA (who'd booted him from IA due to laziness and incompetence) informed him that they would be auditing the state of such monitoring (which he'd been responsible for to some degree), and suddenly it became his top priority.
There are many types of compliance within financial firms, and while a PITA, are crucial to safe and legal operation of these firms. When not taken seriously, there can be very bad consequences to these firms. My guess is that HSBC came to realize that they had possible exposure and wanted to stomp on it. Not doing so can allow regulators to enact heavy fines, even shut down lines of business.
This story has zilch to do with the timing of just before bonus day, but rather begs the question of why it didn't happen sooner. And I hope that those who are angry about 'just before bonus day' understand from my writing that it was breaking serious rules that are meant to protect clients and the markets, etc.
Several years ago, I was working at a major bank where, when you entered the trading floor, were supposed to put your cell phone into a locker - except that the rule was no longer enforced. This firm later became entangled in a huge scandal that likely took advantage of the lack of enforcement.
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