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On Jan 22, 2020 Bloomberg announced that the use of Telegram for conducting a business deal was why the court was ruling in favor of Hyundai Motor Securities Co, costing Yuanta Securities Korea Co. ~USD $12.6 million.
The Seoul Central District Court has ruled that conversations held via Telegram are not binding contracts. The reasoning is that chats can be secret with no trace on servers, and that conversations and messages can be removed or deleted.
Employees at the two companies had used Telegram to have a conversation about arranging a deal for Hyundai Motor Securities to buy bonds from Yuanta. The deal was worth 14.8 billion won, but Hyundai said it was just a conversation, and that they made no formal agreement to purchase.
It appears that although Yuanta considered it to be a concluded business deal, from Hyundai’s view it was simply an informal conversation. Yuanta filed the lawsuit against Hyundai in 2018 in an attempt to force the purchase that had been discussed on Telegram.
Within the financial industry, trades are made every minute, but this is not the first court ruling that has recently sided against instant messaging. In this case it came down to a lack of clear records. The Korean court was clear that they considered a conversation on Telegram not enough to prove that a deal was taking place.
Losing several million dollars is a hard lesson in ensuring you have a solid paper trail for your business conversations. Companies allowing employees to have work related conversations via their client’s personal messaging apps have to make sure they are able to retain the conversations.
The simple answer is that for a company, every single message sent to client’s messenger needs to be properly recorded, monitored and stored. In-house, with the company having full access and ownership of messages, not leaving it with employees, on their personal messaging apps.
We have talked previously about the need to embrace instant messaging for client communication. However, as Yaanta Securities Korea Co., discovered, if you cannot produce a formal business record of the communication, this might result in loss of business.
The legal ruling declared that because “secret chats on [Telegram] don’t leave a trace on its servers and conversations can be removed” they are not legal evidence of a conversation that can act as a binding contract.
If this situation had occurred on email or while employee was using The LeapXpert Messaging Orchestration Platform, then the records of the conversation would have been able to be admitted to the court. The judge would clearly have seen that an agreement to purchase had been reached.
Unfortunately for Yuanta, they allowed their employees to conduct business on personal instant messaging apps, that does not allow the company to retain a record of the communication. So, if Hyundai Motor Securities decided that they didn’t wish to purchase the bonds after all, there was no recourse.
This was a very expensive mistake and one that is actually occurring around the world with increasing regularity.
Modern communication patterns are changing the way companies do business. Until companies increase their awareness of how the inability to retain employee conversations from instant messaging affects their business, we will likely see more of these court rulings in the papers.
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London Finovate Feb 2019! We are very excited for upcoming introduction of our compliant communication experience between businesses and their clients at Finovate 2019 in London! Integrated with WhatsApp, WeChat and LINE and ensuring that all client communication is tracked within the single LeapXpert experience! Demo Session #6 on Feb 13, 11:15 am. All welcome!Read
Finovate – thank you, it was a great event! We were truly delighted to present LeapXpert compliant communication experience today! Would be happy to answer any further questions and inquiries or present a detailed product demo to a specific company. Being introduced to leading world banks, LeapXpert communication platform represents the future of compliant communication in fintech. Click and watch the video.Read
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