Tuesday, March 21, 2023
HomeEconomyMorgan Stanley fines bankers $1 million for messaging breach

Morgan Stanley fines bankers $1 million for messaging breach


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Morgan Stanley imposed financial penalties of more than $1 million per employee on bankers for conducting official business on WhatsApp and other messaging platforms.

The bank’s forfeitures are the bank’s way of punishing employees for a scandal that tarnished the group’s reputation and resulted in it paying $200 million in regulatory fines last year.

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Ranging from a few thousand dollars to more than $1 million per individual, penalties are based on a points system that takes into account factors such as the number of messages sent, the banker’s seniority at the institution and whether he has received prior warnings, said people briefed on the matter.

Depending on the size of the penalty, funds have been withdrawn from previous bonuses or will be deducted from future payouts.

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Morgan Stanley declined to comment.

The employee penalties are the latest consequence of a broad crackdown on Wall Street by US regulators over the use of personal phones and unapproved apps. The multiple investigations resulted in more than $1 billion in fines across the banking industry.

US regulators said banks’ failures to ensure employees’ electronic communications were properly stored had impeded their investigations.

In 2020, Morgan Stanley fired at least two senior employees from its commodities division – Nancy King and Jay Rubenstein – over their use of personal messaging apps, the FT reported at the time.

Other traders on Morgan Stanley’s commodities team were also warned about using messaging apps, a person briefed on the matter said. Other banks, such as Credit Suisse and HSBC, also fired bankers involved in the scandal.

Morgan Stanley is among the banks hardest hit by the investigation, and last year it agreed to pay $200 million to the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Morgan Stanley now offers employee training sessions explaining when they should switch conversations from personal devices to official channels like work email. This can include seemingly innocuous instances where colleagues exchange messages about the time or location of a meeting.

The group warned employees that such seemingly trivial messages often lead to more concrete discussions, said a person familiar with the bank’s training programs.

Many banks now require employees to take photos of work-related messages on personal devices and forward them to compliance departments for preservation.

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