The SEC has fined Moody's, Fitch, S&P Global, and three other ratings firms a combined $49 million over its use of WhatsApp.

As Reuters describes, each of the six firms "admitted to significant failures by the firms and personnel to maintain and preserve electronic communications."

“We have seen repeatedly that failures to maintain and preserve required records can hinder the staff’s ability to ensure that firms are complying with their obligations and the commission’s ability to hold accountable those that fall short of those obligations, often at the expense of investors,” Sanjay Wadhwa, deputy director of the SEC’s enforcement unit, told Bloomberg.

This is not the first time the SEC has fined Wall Street for skirting recordkeeping rules by using WhatsApp. JPMorgan was hit with a $200 million fine back in 2021 for doing so, reports CNBC.

“As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight,” Gary Gensler, head of the SEC, said at the time.

But HR Ratings, one of the 6 ratings companies that settled with the SEC, released a statement claiming: “HR Ratings has significantly strengthened its electronic recordkeeping policies and procedures. …The settlement with the SEC underscores our firm commitment to upholding regulatory standards in every jurisdiction where we operate.”

Verdict

It's never a good look for ratings agencies—who are supposed to be something of an internal referee for Wall Street—to flout laws and break recordkeeping rules (intentionally or not). Hopefully, these firms will learn their lesson and enforce stricter protocols amongst employees about how to utilize WhatsApp and other messaging systems.