Labour MEP Anneliese Dodds has called for more attention to be paid by national regulators to new software that auto-deletes messages in the banking sector. The ‘Symphony’ software has previously been advertised as saving banks “billions of dollars in fines” and there are concerns it could lead to a new Libor scandal.
Symphony’s investors include search-engine giant Google, together with Goldman Sachs, Bank of America, Credit Suisse, Natixis, Société Générale, Deutsche Bank, HSBC, Morgan Stanley and JPMorgan.
Anneliese Dodds MEP raised her concerns in letters to Jonathan Hill, European Commissioner for financial services, and Steven Maijoor, head of the regulator ESMA (the European Securities and Markets Authority).
Anneliese said in the letter: “That is a very worrying way to advertise a business, and not one that seems in keeping with the principle of regulatory compliance. I still think it is therefore essential to make sure that Symphony, and the banks that use it, are going to comply fully with European law.
“It is worth remembering that the same banks that paid fines during the LIBOR scandal are now investing in, and utilising, the Symphony Platform. Deutsche Bank had destroyed records vital to the Libor investigation and is now an investor in Symphony.”
This is the second letter that Anneliese Dodds has sent on the subject, following a previous letter that was co-signed by fellow socialist MEPs Elisa Ferreira and Pervenche Berès. Both letters called for additional efforts to safeguard transparency in financial markets.
In this latest letter, Anneliese calls for national regulators to force firms using Symphony to leave a so-called “encryption key” (which enables the retrieval of deleted messages) with a third party, so that regulators can access it if needed for an investigation. This has already been implemented in the US by the New York Department of Financial Services. Such an action would help combat the destruction or covering up of records, by enabling more than one party to verify the content of messages.
Anneliese Dodds concluded: “I believe that by making Symphony share the decryption key with a third party, regulators can ensure good governance and banks can underline the integrity of their record keeping.”