"Wall Street's Restaurant Secret: Illegal Talking over Lunch is Out of Control"

> Dirty jokes and NSFW GIFs. Snaps of unsuspecting colleagues on the trading floor. Screenshots of confidential client positions.

> All that -- and, on occasion, even legally dubious information -- is increasingly being trafficked over the new private lines of Wall Street: street-level restaurants like McDonalds and Taco Bell.

> “They’re always behind,” said Jack Rader, a managing director at ACA Compliance Group, which sets up monitoring systems for financial services companies to flag potential regulatory problems. “It’s almost impossible for a compliance department within buyside or sellside firms to stay ahead of communications technology that is available for employees like the basic human activity of talking in private at a restaurant.”

Oh c'mon. Encrypted messaging apps are orders of magnitude more efficient and discreet for communication in the context of the overall finance industry, compared to "talking over lunch" (or any other meatspace location).

Not sure I have any well formulated thoughts about the significance of this trend among finance types... but I don't think your analogy is terribly illuminating.

> Encrypted messaging apps are orders of magnitude more efficient and discreet

What's more discreet than a quiet conversation that you can deny happened later? You can take screenshots of just about any digital communication. The rest you can take photos of with your smart phone.

I'll grant you efficiency, though, especially if it's a group conversation and some amount of coordinated activity is involved.

In-person meetings are far more conspicuous. Other people, security cameras, etc.

Right. There's potential for anonymous rewards. For example: "Do ... now. If you want more updates, donate 1 BTC per ... to 1FBgaKqRZ1dFhjgAZuEqWNkoYdcFeJGPaG."

Paul Graham's "Submarine" definitely comes to mind.

The suit is back!

It is unclear how the comment to which you replied led to you being reminded of "Submarine".

going to leave soon

The FBI can track who you talk to in-person, but they can not with WhatsApp at the moment. Thus WhatsApp is orders of magnitude more efficient.

I doubt that, WhatsApp was bought by facebook to datamine contact lists, I'm pretty sure the FBI can request this data.

Do you have any grounds for this statement whatsoever? Sounds a lot like baseless speculation. How would you imagine that FBI bypasses the end-to-end encryption?

The meta data of who talks to who is not encrypted.

Edit: This is the whole problem tin-foilers have with Signal being the sole operator of servers and not allowing for federation.

plain old fashioned MITM with a court order accompanied by a gag order should be sufficient.

Remember WhatsApp is BOTH the PKI infrastructure and the and the message transmitter. It is trivial for them to MITM by sending you and the recipient a different public key that they control and intermediate.

The encryption prevents OTHERS from snooping on you. It doesn't protect you from WhatsApp itself - or the government acting with a warrant.

So the media starts to scare us about illegal texting. Oh no! Lets make all chat apps non-secure so the bankers can no longer chat illegally anymore

That was my first thought as well. Look out for more "[unpopular group] uses [encrypted service] to break the rules" articles coming soon.

Well, it is an easy way to "sell" these things...

Anyway, I've got two: paedophiles and terrorist.

Apparently, traders have now joined that elite. I'm just surprised bankers didn't make it there first... given the public sentiment. (I'm not sure I have any position (heh) on the matter myself.)

Texting while driving does actually kill, but there is a less definable/unpopular "them" to target.

That, and encrypted texting while driving is just as dangerous as unencrypted texting while driving.

In that case, however, it does not matter if the messages are encrypted or not.

And techies! /s

Indeed, we really are all awful people. /s

Actually that's a pretty big deal. Financial institutions have far more stringent rules than an average company regarding communications.

Analysts must be shielded by "Chinese walls" from traders. Just imagine what a trader can do if he gets a 20 minute head start (or just a few pertinent bullet points) of an influential report, which is about to be published. Look up 'front running' for details.

Communications within financial companies and between banks and outside entities are pretty heavily regulated. And for very good reason.

You are right that financial crimes are a big deal. However the solution to criminality is not to create a surveillance state.

Well, banks sure have a solution for such problems. They call it self-regulation.

[Hey you! Yes you at the back! Stop laughing...]

A surveillance state is exactly what the financial companies have created within their walls. Typically, every keystroke is logged.

I mean it's one solution. What is the solution?

Let's start with actually prosecuting those that break current laws without regarding color of skin or size of bank account.

To disincentivize huge salaries for people who create zero value, and just move money from point A to point B.

Moving something that is currently at A but should be at B absolutely creates value.

Well, depends on your definition of value. In Marxian economics, with the exception of natural resource, value is created by labour, and commodities have both a use value and exchange value.

This just isn't true. Don't let Marx cloud your understanding of Smith.

Value is created when someone is willing to pay for something to get done, and that something gets done at a cost less than or equal to their willingness to pay. If somebody A is willing to pay for money to be moved, then as long as somebody B is there to move that money, then somebody B is likely generating value by doing so.

My mistake, you're right. Going to correct my comment.

But the value of commodities aren't fixed, but vary in both time and location. Much as taking a lump of gold and turning into a ring adds value to the gold, so does bringing the gold from the goldmine to the jeweler.

Hey, this is a big deal. Bankers used to be above-board, even role models for ethics and legality. SnapChat has allowed them to be come corrupt. /s

The subtlety missing is that the 'chat room' scandals were (at least in part) conducted on Bloomberg's own platform[1] And that one of the 'big brother-like databases' was the one their journalists used to write articles based on how their clients used their platform [2] The article doesn't really touch on the publisher's skin in the game other than mentioning how compliance friendly their chat now is. Hmm...

[1] http://www.bbc.co.uk/news/business-21358362

[2] https://mobile.nytimes.com/2013/05/13/business/media/bloombe...

> A big reason more and more Wall Street types have turned to messaging apps is because they are tired of having every written word -- work-related or not -- ingested into vast, Big Brother-like databases ...

I'm tired too.

So people have private ways to communicate, and sometimes they break the law by communicating forbidden stuff, hasn't that been a thing for ages? Why the sudden hate on Whatsapp, if there's a rise of law breaking messages, the root cause is elsewhere.

The UK's Home Secretary Amber Rudd, fives days ago said "WhatsApp must be accessible to authorities", following the Westminster attack.

She summoned some big tech firms yesterday to tell them how unacceptable it is that the police can't read encrypted messages.

All this is going to do is invade the privacy of regular people, and force 'terrorists' to go off-the-grid which will make them even harder to track. The IRA were pretty good at terrorising without any kind of electronic communications - encrypted or not.

ISIS have already built their own chat application, allegedly, and distribute the APK privately. If the government ban e2e crypto in apps like WhatsApp/Signal/Telegram, expect to see more such apps from groups who politicians can't exactly summon into their offices for a chat.

https://techcrunch.com/2016/01/16/isis-app/

I'm completely against banning encryption, and also against the argument I'm about to use, but the devil's advocate to your comment is to claim that if the only people using encryption are the "bad guys", detecting encrypted data on the networks is enough to spot a "bad guy", even if you can't read their data.

Sure, that is a potential issue with the argument. But the broader argument is that you can't make crypto go away by wishing. You can't unpublish bcrypt, libsodium, OTR, Signal Protocol, and you certainly can't unpublish the maths they are based on.

All you are really doing is making it inconvenient for normal, law-abiding folk to use strong crypto. A suitably motivated attacker (think ISIS, al-Qaeda etc.) could adapt to a world without crypto using some kind of steganographic approach (three poop emojis and a Miley Cyrus gif = blow the building up!). Every approach you take could be manipulated by the bad guys to their own advantage.

Because the previous ways of communicating while working for a company with a compliance department that are hard to subpoena weren't on hundreds of millions of people's cell phones? Not saying that means the law should go after WhatsApp or it's WhatsApp's fault (I would strongly argue against both), but that doesn't mean it being made easier and deniability becoming more plausible isn't the cause.

What do you mean? How is WhatsApp more "plausibly deniable" than saying these things to someone in person?

Probably due to fewer evidentiary "crumbs" left behind. No witnesses to meetings, conversation eavesdroppers or recorded calls --now everything is more or less deniable and irrefutable, unless one of the parties decides to double cross the other.

You cannot prosecute someone based on hearsay. In someways Whats App makes it easier because you could take the phone as evidence and see a record of all non-deleted correspondence complete with time stamp rather than trying to build a case based on two buddies grabbing a beer together.

Which is why a lot of these technologies are targeted. Not because encryption makes it harder for enforcement agencies since there's always been a plethora of ways to communicate in secret. But because gaining back doors to these applications makes it easier for them than it's ever been.

Sadly the point enforcement agencies always overlook is they're basically just fighting a game of "wack a mole". Encryption isn't something that's going to go away. Not even if you legislate against it. People know it exists and there are a thousand different ways to run software on your handset - even just via web sites directly thus bypassing all the controls for side-loading native apps. So all this posturing about the "evils" of WhatsApp is just a monumental waste of everyone's time.

IIRC unencrypted chatroom logs were used in the investigation against banks rigging FX https://en.m.wikipedia.org/wiki/Forex_scandal

Who did whatsapp piss off? there seems to be real campaign against them

The campaign is against all encrypted apps and they just happen to use WhatsApp as a scape goat since it has the largest user base. Targeting Signal or some other obscure encrypted messaging app wouldn't be as effective.

encrypted apps dont break SEC laws, people break SEC laws

My first thought when reading the headline. It's not "illegal texting". It's the crimes they do via texting (or via any other communication medium) that are illegal.

Also, I thought the government already didn't care about any of the bankers' crimes, because it never seems to prosecute them. If there are banking crimes committed out there, I'm sure the NSA (and now 16 other agencies [1]) are aware of them, even going back several years. They just choose not to prosecute them.

[1] https://www.nytimes.com/2017/01/12/us/politics/nsa-gets-more...

Bingo on the selective prosecution point.

Can a corollary to the NRA riff be poor software design and bugs don't create vulnerable systems, hackers create vulnerable systems?

It's like saying, coal in and of itself does not create global warming, it's people wanting jobs and cheap energy who contribute to global warming.

I thought it was vulnerability-ignorant architects create vulnerable systems

Isn't the obvious solution to ban personal phones, or personal apps, at work? It's not hard.

Do you honestly think that's a feasible solution? Who in their right mind would work for a company that doesn't allow them to bring their personal phone to work? Unless it were required by law, no company would do that to their white collar employees -- they'd all leave for a company that doesn't treat them like eight year olds. (I feel like this would never be suggested on HN if we were discussing software companies rather than finance.)

The finance industry already has much more onerous security requirements than most software companies. One reason I wouldn't want to work for a financial firm is that they'd never let me have root on my own desktop, or install whatever software I wanted.

The workers put up with it because finance pays gobs and gobs of money. Would you leave your personal phone at home for the right price? I'm sure you [or somebody else equivalently talented to you] would.

>Who in their right mind would work for a company that doesn't allow them to bring their personal phone to work?

Uh, everyone in the military and the defense industry who work in EMSEC zones?

Literally hundreds of thousands of people, if not millions.

Many companies with highly confidential information do this. A friend of mine is a programmer at such a company.

Mobile phones are banned on trading floors. It is just hard to enforce for the reasons you mention.

It's kinda a soft ban though, and hard for any MD to enforce when they're the most guilty of it.

They still have trading floors? I thought all trades went electronically these days.

Only on some very specific and liquid products (shares, FX, futures, perhaps certain bonds). Most products still trade over the counter (i.e. by phone).

I have zero signal at work due to the building being a huge metal frame and metal mesh on the windows.

This means I cannot SMS anyone. It also means increased productivity as I don't bother looking at my phone to see if anyone has texted me.

I can get WiFi at work and use Internet IM/communication apps but in all seriousness, I am there to work and putting my phone in my pocket on airplane mode is actually far more beneficial than you think.

That could also make employees more productive.

Could?

It's done regularly in trading floors

No cell phones on trading floors at Goldman, if I recall.

Nothing stopping people from chatting on Whatsapp after hours though; plenty of stuff stays sensitive after the close of business.

There is plenty of confidential information that is sensitive for more than a day.

In other news: they also meet and talk!!!

Yes. Which kind of journalist write these pieces anyway? What kind of publisher is so corrupt that they'd both have the wrong idea of freedom, the wrong journalist to write them, the wrong editor to validate the article and the wrong readers who are gullible enough that this headline makes it through to reader's vote?

If your rule requires assigning a policeman to look over every person's shoulder to enforce it then you should probably reconsider it.

I agree. I'm not one to use the "disruptive" term frequently, but that's what's going on here, IMO - traders are using disruptive technology. As with mp3s, the answer (again, IMO) is not to try to prevent their use, but to adapt the business model and laws to take advantage of them. That might mean significant changes to - and upheavals in - the financial world, but the financial world has never had qualms about inflicting those on other people.

Sooner or later, people are going to be able to communicate using encrypted channels without even needing an external device, just like they're going to be able to capture stills and video without needing anything other than their eyes and implanted hardware.

Rather than trying to enforce increasingly-unenforceable rules, I think it makes more sense to think about the business (or other organization) those rules are designed to protect, and make a call on whether it's even practical or needs to be reworked - or maybe even scrapped and replaced with something else.

"Out of Control" is freedom.

I would argue there is no such thing as illegal texting. There is the illegal sharing of information, which takes the issue right back to the perp, not to an app.

Why didn't the political motivated demand to ban all TOYOTA trucks after ISIS was seen parading in hundreds of them unchallenged though the Middle East?

It is not the app, the truck, the gun. It's people.

Hum. I mean I don't condone conducting illegal activities over encrypted chats of course (particularly given than some activities quoted in this article are pretty shocking and would cost these banks the loss of customers), but we should also keep in mind what regulators and compliance departments do with this monitoring of conversations.

The best example is the Fabrice Tourre affair at Goldman Sachs. Two examples I noted:

First the SEC quotes Tourre "More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!" [1]

Where the actual sentence was (translating the bits in French): You should take a look at this article... Very insightful... More and more leverage in the system, the whole building is about to collapse anytime. Only potential survivor, the fabulous fab (as Mitch would kindly call me, even though there is nothing fabulous about me, just kindness, altruism and deep love for some gorgeous and super-smart French girl in London), standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all the implications of these monstruosities!!! Anyway, not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the US consumer with more efficient ways to leverage and finance himself, etc [2]

I wouldn't write that in an email, but still, the sentence has a very different meaning with the bits edited out by the SEC back in.

Second example, one of Tourre's managers was quoted writing "boy that timeberwof was one shitty deal". This was repeated over and over by congress as if it was a reference to the quality of the collateral of the transaction, i.e. Goldman Sachs sells some product to a client that they call internally a shitty product. But if you look at the actual email trail [3], they are not discussing about the quality of the collateral in that CDO, but of the fact that they are left with a $300m unsold position, which understandably is undesirable as a market maker.

So here we have examples of compliance departments sending unrelated personal emails to the regulators (in a shameless attempt to scapegoat an employee) and regulators editing sentences to alter or ignore the context. No wonder why bankers aren't keen to have their conversations on record.

[1] https://www.sec.gov/litigation/complaints/2010/comp-pr2010-5... page 7

[2] http://i.telegraph.co.uk/multimedia/archive/01623/Fabrice_To...

[3] https://www.hsgac.senate.gov/imo/media/doc/Financial_Crisis/... page 224

Did I miss it or did the reporter in this article neglect to mention the parent company's Bloomberg Messaging Service?

I don't want the government I pay to spend ANY time on this. I like to think of budget accountability as scrutinizing your partner over their spending decisions in a joint bank account. Just stop wasting time and money on that!

this sounds like Bloomberg LP terminal advertising

> They’ve learned even the slightest misinterpretation can land them in hot water -- not only with compliance, but with prosecutors on the lookout for financial crimes.

This is exactly the issue with police body cams.

The issue with every way of gathering info.

The question is "are data from body cams more armful that they help preventing bad behavior".

looks like we're in a bubble.