Banker walks free after charged with insider trading on deleting WhatsApp

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Former VTB banker Konstantin Vishnyak, who was charged by FCA with deleting WhatsApp messages in an insider dealing case, was found not guilty. The acquittal by the London jury is a body blow to the FCA in its pursuit of insider trading charges. FCA had alleged that Vishnyak deleted WhatsApp from his mobile after he was required to provide the messages as part of the investigation.

In the high-profile case that was considered as potentially groundbreaking for the supervision of employees and bankers in the financial industry, the banker was released by the judge after jurors deliberated over the case for more than three hours. Vishnyak was accused of destroying evidence as he deleted his WhatsApp, along with the messages, before he was arrested and investigators demanded to see the messages. Financial regulations make it mandatory to do WhatsApp archiving and making the messages available during e-Discovery processing and other investigations.

Vishnyak’s case was in the news as it is FCA’s first prosecution in connection with the alleged destruction of documents under the Financial Services and Markets Act of 2000. According to the act, it is an offense if a person destroys any relevant documents if he or she knows that an investigation is being or likely to be conducted. The act applies if a person “falsifies, conceals, destroys or otherwise disposes of a document which he knows or suspects is or would be relevant to such an investigation”.

Experts say that the prosecution had to prove not only that Vishnyak had deleted the messages, but that the messages were relevant to the investigation, which was a harder task to accomplish. Neil Swift, a partner at law firm Peters & Peters said, “it is for the prosecution to prove their case. They have to have evidence that the defendant knew or suspected that the messages he deleted would be relevant to an investigation into insider dealing.  That goes beyond simply proving deletion.”

After Vishnyak’s acquittal, FCA released a statement that said “Konstantin Vishnyak has been found not guilty at Southwark Crown Court of one count of destroying documents in September 2018. The FCA is disappointed with the outcome but respects the verdict. We will take action whenever evidence we need is tampered with or destroyed.”

However, FCA further said that the ruling wouldn’t change how it approaches prosecution on similar cases and warned that it will take action whenever evidence it needs is tampered with or destroyed. Financial firms and their employees are well-advised to do WhatsApp archiving and strictly follow protocols on WhatsApp call recording and other text messaging compliance regulations.

Using WhatsApp in the workplace is not seen kindly by many financial firms and in this regard, it is good to recollect how JPMorgan dismissed one of its veteran employees for using WhatsApp for official business purposes. Similarly, two senior commodity traders at Morgan Stanley also lost their jobs after they were found using WhatsApp and other unauthorized messaging platforms at work.

Bankers and other professionals in the financial industry need to add WhatsApp archiving and WeChat archiving tools to their phones so that they aren’t dragged to courts or being investigated for not keeping call recording or message archiving. According to call recording FCA laws and call recording MIFID regulations it is an offense not to monitor phone calls and record SMS messages and instant app messages. The use of mobile archiver solutions can save your time, money and reputation by helping you not fall into a legal mess.

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