Morgan Stanley has fined some of its bankers more than $1 million each for conducting official business on WhatsApp and other messaging platforms.
Nairametrcs gathered that the fines come as the bank tries to punish employees for a scandal that tarnished the group’s reputation and resulted in a $200 million regulatory fine last year.
How the fines were determined: Ranging from a few thousand dollars to more than $1 million per individual, the penalties are based on a points system that takes into account factors including the number of messages sent, the banker’s seniority, and whether they received prior warnings, said people briefed on the matter.
According to reports, depending on the size of the penalty, the funds have either been clawed back from previous bonuses or will be docked from future pay.
The recent regulatory crackdown: The employee penalties are the latest fallout from a wide-ranging crackdown on Wall Street by US regulators over using personal phones and unapproved apps. The multiple investigations have resulted in more than $1bn in fines across the banking industry.
US regulators have said banks’ failures to ensure that employees’ electronic communications were stored properly have impeded their investigations.
Previous sanctions and warnings: In 2020, Morgan Stanley fired at least two senior employees at its commodity division, Nancy King and Jay Rubenstein- over their use of personal messaging apps, the FT reported.
Other traders in Morgan Stanley’s commodities team were also given warnings about their use of messaging apps, said one person familiar with the matter. Other banks such as Credit Suisse and HSBC have fired bankers embroiled in the scandal too.
Morgan Stanley has been among the banks hit hardest by the investigation, with the company last year agreeing to pay $200 million to the Securities and Exchange Commission and Commodity Futures Trading Commission.
What you should know: Morgan Stanley now gives employees training sessions explaining scenarios when they should shift conversations on personal devices to official channels such as their work email. This can include seemingly innocuous instances where colleagues are exchanging messages about the time or location of a meeting.
The group has warned employees that these trivial messages often lead to more material discussions, said a person briefed on the bank’s training programmes.
Many banks now require employees to take a picture of work-related messages on personal devices and forward them to the compliance departments to preserve them.
