Emma Ann HughesMar 31 2017

How boasting about clients could cost you

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
comment-speech

News flash! Nobody likes your bragging on social media or instant messenger apps. Especially the regulator.

If this is a revelation, you care to ignore as you can’t survive without posting your hotdog leg photos and seeing how many thumbs up they get then I seriously suggest you rethink your stance.

This week the regulator – quite rightly – got tough with an investment banker for “over sharing” (as the youths of today say) on WhatsApp Messenger.

WhatsApp is a cross-platform instant messaging application that allows iPhone, BlackBerry, Android, Windows Phone and Nokia smartphone users to exchange text, image, video and audio messages for free.

The Financial Conduct Authority fined former investment banker Christopher Niehaus £37,000 for sharing client confidential information over WhatsApp.

The managing director in the investment banking division at Jefferies International Limited received client confidential information and, on a number of occasions between 24 January and 16 May 2016, shared this information via WhatsApp with both a personal acquaintance and a friend.

Why did Mr Niehaus share information? According to the regulator it was because he wanted to impress the people that he shared the information with.

The details of the information he shared included the identity of the client, the details relating to the client mandate and the fee Mr Jefferies would charge for their involvement in the transaction.

Mr Niehaus also boasted about how he may have been able to pay off his mortgage if one of the deals was successful.

Mr Niehaus was suspended from Jefferies pending the completion of its disciplinary process but he resigned before that process was completed.

He provided full admissions to the FCA in an early interview and, as a result was given a 15 per cent reduction to his fine.

News Flash! Nobody likes your bragging on social media or instant messenger apps. Especially the regulator.

Ultimately the regulator found Mr Niehaus failed to act with due skill, care and diligence. I think the FCA should have added “poor taste” to that list of unseemly behaviour.

Neither Mr Niehaus nor the individuals he shared the information with dealt in any securities relating to these disclosures and it was accepted by the FCA that this information was not shared with that expectation.

So, really what can we learn from this?

When I think of City bars in the late 1980s and early 1990s – an era when Gordon Gekko’s “Greed is good” speech wasn’t viewed as a cautionary tale of how chasing excess could drag you under but was seen as a motto for life by some – I think of boasting.

Think of the bragging by City suits about how much money could be made by the number of high net worths that were being handled, stocks being traded, etc.

This was improper, tasteless and unbecoming behaviour that these individuals thought would impress people.

Is a bar a securer network than WhatsApp? I would argue not. It is just the main boasting forum has shifted from over cocktails to smartphones.

The regulator was less likely to spot you in a bar and that conduct would not have given the watchdog the hard evidence of a screen grab to slap a fine on the braggards of this world.

Some may question whether Mr Niehaus did deserve a fine. 

He was just bragging, they would argue.

I would argue that speaking with an adviser or anyone working in financial services you expect them to treat what you tell them as being said in confidence and to show care and respect.

You wouldn’t expect your private practice GP, dentist or physician listing your ailments and boasting about how much money he is going to make putting you back to the peak of physical fitness, would you?

Mr Niehaus was wrong to boast. 

Nobody should boast about a client’s riches and how much cash they are going to make for them or out of them. It isn’t funny or clever. It makes the whole profession look bad.

emma.hughes@ft.com