JPMorgan has sidelined at least 3 government bond traders as part of its second investigation this year into traders' chat messages
- JPMorgan Chase is investigating whether a group of traders on its interest rates desk broke company policy, and they've pulled them from the trading floor.
- The bank in recent weeks removed the employees, including two executive directors in the US and one in London, from their trading duties and shut off their Bloomberg terminals while it reviewed their behavior for compliance breaches.
- The employees could resume their roles at the bank without further action, depending on the outcome of the investigation.
- In a separate case, the bank in January placed senior fixed-income trader Edward Koo on leave while investigating whether his use of WhatsApp violated company policy.
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JPMorgan Chase has sidelined more fixed-income traders while it reviews employee communications.
For at least the second time this year, the bank has pulled traders off its trading floor at 383 Madison Ave while it reviews whether they engaged in conduct that breached company policy.
In recent weeks, the bank has removed a handful of interest rates traders - at least two in New York and one in London - and turned off their Bloomberg terminals while the company investigates their behavior, according to people with knowledge of the matter. The employees could potentially resume their duties without disciplinary action, pending the results of the review, the people said.
The move follows a similar one in January, when the bank put credit trader Edward Koo on leave during a review of whether he violated policies by chatting with colleagues on WhatsApp, the Facebook-owned messaging service, Bloomberg reported that month.
Sources said the two inquiries, while both involving chat behavior among traders in the fixed-income division, are unrelated.
JPMorgan rates traders Trevor Bushell, an executive director in London, and Sal Pallante and Rahmaan Streater, executive directors from the US interest rate trading desk, are among the employees currently on leave from their trading responsibilities while the investigation that started in the final days of January moves along.
A JPMorgan representative declined to comment. Attempts to reach the traders via personal phone, email, and LinkedIn were unsuccessful.
What makes the latest investigation different than the one into Koo's WhatsApp chats, in part, is that it involves communications made on approved methods. According to multiple sources, concerns of improper chat conversations triggered the inquiry.
Industry sources, including people who have spoken to the traders, said the conduct in question took place on the Bloomberg terminal chat platform.
Wall Street traders regularly conduct business over Instant Bloomberg, the terminal's chat feature. That means that the bank would have the ability to monitor and archive chats, and flag material for review.
A generation of Wall Street traders have been ensnared by conducting improper communications on approved platforms like IB chat. Authorities investigating the foreign-exchange and Libor rigging scandals of the last decade, for example, routinely made a case by looking at transcripts of those messages. Their legal proceedings abound with colorful language pulled from the communications.
By contrast, the use of WhatsApp on trading floors - which is not an approved method of business communication at the bank, regardless of its content - has bedeviled compliance departments across Wall Street almost since its inception. WhatsApp uses end-to-end encryption, which makes it difficult for banks to monitor the activity unless they can get access to the phone where it occurred before the employee deletes the messages.
For that reason, just being caught using the service can sometimes be enough to trigger a probe.
