A former Jefferies Group LLC investment banker and managing director was fined £37,198 after divulging confidential client information via WhatsApp to a “personal acquaintance and a friend” in the UK’s Financial Conduct Authority’s (the “FCA”) first action related to social messaging and employment.
The FCA Final Notice dated 29 March 2017 reports that Mr Niehaus, who had voluntarily turned over his phone to his employer, had shared confidential information regarding a client’s identity, details of the work being performed and the fee being charged, over the popular messaging service on a number of occasions in an apparent attempt to “impress” others. He was suspended from Jefferies but later resigned before the completion of a disciplinary process by the company.
Mr Niehaus’s penalty was reduced by 30% because he made a full admission of his actions to the FCA in an early interview. While Mr Niehaus stood to make no financial gain from the disclosure of the confidential information, the FCA imposed the penalty because of his “failure to act with due skill, care and diligence.”
Workplaces are failing to keep up with new technologies
This fine comes as financial companies have begun cracking-down on the use of certain apps, either by restricting use or banning certain apps from company phones. As reported in the UK media, a Bank Chairman recently resigned his position several weeks after his daughter published Snapchats which he had sent her about being “bored” at work. While the Bank gave no reason for his departure, the risks associated with new media in the workplace are clear.
The FCA Conduct of Business Sourcebook states that firms should “take reasonable steps to prevent an employee or contractor from making, sending or receiving relevant telephone conversations and electronic communications on privately owned equipment which the firm is unable to record or copy”.
These incidents further highlight increasing concerns that workplaces are failing to keep up with the fast-changing world of rapid technological innovation. This worrying trend is evidenced by William Fry’s Social Media Snapshot 2016 which suggests that less than half of employers have a social media policy in place while 78% of employees admit to using social media during the working day.
What steps should an employer take?
These issues raise important questions for employers as to how to monitor and ensure appropriate professional behaviour of staff while using devices overwhelmingly associated with personal use.
As good practice employers should have an up-to-date social media policy in place. This can also function as a potential defence to claims against the employer (via vicarious liability) for employee conduct related to private or workplace-related WhatsApp chat groups. Well-defined policies also help to foster environments where employees are aware of what is acceptable professional behaviour and further are mindful that despite the new rapid media pace ethical and professional standards should be ensured across all areas of the workplace.
For more information, please contact a member of our Employment & Benefits team.
Contributed by Catherine O’ Flynn
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