Beginning Next Week: InsideCounsel will become part of Corporate Counsel. Bringing these two industry-leading websites together will now give you comprehensive coverage of the full spectrum of issues affecting today's General Counsel at companies of all sizes. You will continue to receive expert analysis on key issues including corporate litigation, labor developments, tech initiatives and intellectual property, as well as Women, Influence & Power in Law (WIPL) professional development content. Plus we'll be serving all ALM legal publications from one interconnected platform, powered by, giving you easy access to additional relevant content from other InsideCounsel sister publications.

To prevent a disruption in service, you will be automatically redirected to the new site next week. Thank you for being a valued InsideCounsel reader!


Regulators eyeing trader chat rooms as hot beds of questionable activity

Major banks looking to overhaul their chat room policies as a result

Chat rooms, while not a particularly cutting edge technology, are receiving increased scrutiny from banking regulators who are aiming to dissuade traders from using them to pass sensitive information to clients and peers. Regulators say that chat rooms, which are currently not monitored by banks with the same level of care as phone calls and emails, could be used as a platform to facilitate market manipulation and conspire in shady dealings.

At the heart of the issue are a series of investigations into exchange and currency rate manipulations that were conducted by way of chat rooms.  These investigations may not only end in heavy fines for the banks involved, but could also cause considerable damage to their reputations. Traders are reported to have engaged in boisterous and off color conversations with one another via these chats.

Chat rooms have recently featured prominently in investigations into the manipulation of the LIBOR exchange rates, and could have the effect of chilling industry attitudes toward them as a legitimate means of communication.

Those familiar with the probes relayed to the Wall Street Journals that, RBS, Barclays, UBS, J.P. Morgan and Citigroup have all suspended traders in connection with the currency-market probe. Many of them are now evaluating whether or not traders should have access to chat rooms at all, others are investigating whether or not they can more closely monitor those conversations to hold them to compliant standards.

WSJ reports that both JPMorgan & Chase Co. and Credit Suisse are among the financial institutions looking to do away with the chat room as method of communications. Currently these chats link tens of thousands of financial industry employees at dozens of different banks together. The risk that they’ll use that method to offer sensitive information to one-another is too high for many larger firms.

Chats with titles like “The Cartel” where traders openly joked about the influence they wield of the markets could be disastrous for these banks if the conversations are linked to illegal activity. Given the less than sterling public images most major banks enjoy today, its no wonder top-brass is taking an aggressive look at this area.


For other stories on banking regulations, check out the following:

Regulatory: In-house counsel must become actively involved in privacy matters—Part 2

Regulatory: It takes two to tango (or to split a fee)

Regulatory: As a matter OFAC

Executive Editor

author image

Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.