Investment banker's WhatsApp messages breached client confidentiality, says FCA

A former investment banker has been fined more than £37,000 after sharing confidential client information with a friend and a client over the WhatsApp messaging service.

The Financial Conduct Authority (FCA) said Christopher Niehaus had breached financial regulations which required him to "act with due skill, care and diligence in carrying out his accountable functions".

Niehaus was managing director of the investment banking arm of Jefferies International during the time that he sent the WhatsApp messages, between 24 January and 16 May 2016. The messages included details of two of his clients and their business dealings, the FCA said.

Among the information Niehaus disclosed was a potential acquisition the first client was considering. He also claimed he might be able to pay off his mortgage as a result of the bonus he might receive if the deal completed, the FCA said.

Niehaus also told a friend that a second client needed to raise finance to reduce its debt, including the amount it was looking to raise, and revealed that that client was to complete a rights issue to a rival business, who was also his client, in a WhatsApp conversation last year, the regulator said. Niehaus also told that rival client that his second client had delivered 'a profit warning' and was 'in trouble', it said.

The FCA said Niehaus’ disclosure of client confidential information to a competitor was "particularly serious" as it "could have conferred an undue advantage" to the client that he relayed the information to. The action "demonstrates a failure to pay due regard to the interests of his client", it said.

"Niehaus demonstrated a lack of care in disclosing information, without the permission of his clients, in circumstances when there were no reasonable grounds for doing so," the FCA said in the penalty notice (11-page / 210KB PDF) it issued. "None of the recipients of the information needed this information and disclosure served no purpose."

"Niehaus acquired the information he disclosed by virtue of his CF30 status [which individuals need to have to advise clients on investments and certain other finance matters]. In this role, he was obligated to maintain client confidentiality," it said.

The FCA fined Niehaus £37,198 after granting him a discount for cooperating with its investigations and for agreeing to an early settlement of the case. Niehaus resigned from his role at Jeffries International prior to the end of an internal disciplinary process, the FCA said.