Morgan Stanley fines employees for using WhatsApp to talk about official business
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New York-based global investment bank Morgan Stanley recently issued penalties on a number of employees for endangering the company’s official business by discussing it on messaging platforms that are not deemed secure enough to be used for such purposes. The employees allegedly used platforms such as WhatsApp to discuss official business, which led to fines ranging between thousands of dollars and $1 million.
Morgan Stanley fines employees
Endangering corporate secrets by discussing official business on unsafe platforms is a major breach. This is why Morgan Stanley had to react with severity. Furthermore, sources familiar with the matter stated that Morgan Stanley used a number of factors to determine the penalty for each individual.
This included the volume of messages that were sent by each person, seniority, whether or not there were previous warnings issued, and alike. Reports also indicate that the bank already deducted the fine from some of the workers’ bonuses. As for the others, they will have to settle their own debt from their pay, moving forward.
Morgan Stanley also had to react sharply because it has only been five months since its record-keeping practices resulted in the bank having to pay $125 million to the US SEC, and another $75 million to CFTC. The regulators who probed the bank were not satisfied with what they found last year.
To make matters worse, the bank also had a similar issue over two years ago, when some of its top trading executives communicated via WhatsApp, sharing official business. This was against the company’s policy even back then, and both trading executives were fired, despite their status.
Regulatory probing reveals record-keeping failures on Wall Street
Similar cases have been popping up all over the banking sector, and in 2022, a number of other top US bankers, like Citigroup, Bank of America, and Barclays, all resorted to setting up funds for settling similar cases.
Regulatory bodies, such as the US SEC, require financial companies to preserve their business-related communications and discussions, which can then be audited for regulatory purposes. With that said, the last few years have seen the regulators test whether the lenders were actually respecting this requirement and keeping records of their communications involving official business.
That includes things that were communicated via social messaging apps. The probing led to a major revelation. The SEC shared that its probing revealed that, during the period between January 2018 and September 2021, the companies’ workers regularly communicated via WhatsApp and similar messaging apps on their personal devices. The problem is that they communicated about confidential business matters, which the SEC described as “pervasive off-channel communications.”
The revelation resulted in 16 Wall Street firms having to pay fines. A combination of penalties exceeded $1.1 billion due to failures in adequate recordkeeping.
As many as 15 broker-dealers happened to be subsidiaries of numerous banking giants, including Bank of America, Citigroup, Deutsche Bank, Barclays, Goldman Sachs, Credit Suisse, and others. One of the penalized entities also ended up being an affiliated investment adviser.
