Close Close

Financial Planning > Behavioral Finance

Senate’s Warren seeks review of bank message system after fines

Your article was successfully shared with the contacts you provided.

(Bloomberg) — U.S. Senator Elizabeth Warren wants financial regulators to examine whether a group of banks’ new messaging system can be used to circumvent compliance.

Warren, a Massachusetts Democrat, sent a letter to six agencies Monday asking whether the service will make it harder to obtain instant messages that can be used in investigations. The system was created by Symphony Communications LLC with funding from 14 financial firms, including Goldman Sachs Group Inc.

“My concerns are exacerbated by Symphony’s publicly available descriptions of the new communications system, which appear to put companies on notice – with a wink and a nod – that they can use Symphony to reduce compliance and enforcement concerns,” Warren wrote.

Warren questioned the purpose of the communications system and noted that instant messages have been used as evidence in past enforcement actions against banks, including the manipulation of benchmark interest rates. She implied that the new tool could be used to hide future illegal behavior.

A Symphony spokesman didn’t immediately return a phone call seeking comment.

$66 Million in question

Symphony, based in Palo Alto, California, is backed by a consortium of banks and hedge funds, including Goldman Sachs, Deutsche Bank AG, Credit Suisse Group AG and Bank of New York Mellon Corp.

The firms spent $66 million on the service with a goal of creating a secure and efficient communications system with reach across the financial industry, according to an October 2014 statement.

The Warren letter follows a probe into Symphony’s system for retaining messages that was initiated in July by New York’s banking regulator.

Warren asked the regulators to detail rules that police the retention of communications, any enforcement and compliance concerns raised by Symphony, and any internal reviews of the tool. She asked the regulators to provide her office a briefing no later than September 6.

Agencies that received Warren’s letter include the Securities and Exchange Commission, the Department of Justice, the Commodity Futures Trading Commission and the Consumer Financial Protection Bureau.

Symphony’s system will compete with Bloomberg LP, the parent of Bloomberg News, which has its own electronic messaging for financial firms.