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Morgan Stanley Fines Its Bankers for Messaging Breaches

Morgan Stanley has fined some of its own bankers more than $1 million each for conducting business on WhatsApp and other messaging platforms.

January 26, 2023
2 minutes
minute read

Morgan Stanley has fined some of its own bankers more than $1 million each for conducting business on WhatsApp and other messaging platforms. This is the latest fallout from an industrywide probe that saw US regulators impose the record penalties for monitoring lapses.

The funds have either been clawed back from previous bonuses or will be docked from future pay, according to a person familiar with the matter. The person asked not to be named, as the information has not been made public.

Morgan Stanley is the latest bank to require individual staff to bear some of the burden of an unprecedented regulatory investigation, after it emerged that unapproved messaging platforms were being widely used to conduct business. Finance firms are required to scrupulously monitor communications involving their business to head off improper conduct. In this case, Morgan Stanley is requiring its staff to take responsibility for their use of unapproved messaging platforms and to cooperate with the investigation. This is yet another example of the increased regulatory scrutiny that financial firms are facing in the wake of the financial crisis.

Wall Street was hit with $2 billion in fines in a WhatsApp probe, according to a new report.The fines were imposed on a number of banks, including Goldman Sachs, JPMorgan Chase, and Citigroup, for allegedly violating anti-money laundering rules.The probe is said to have focused on whether the banks allowed their clients to use WhatsApp to conduct illegal transactions.This is not the first time that Wall Street has been hit with billions of dollars in fines for violating regulations. In 2015, the banks were fined a total of $5.6 billion for their role in the financial crisis.

Penalties for individual employees at Morgan Stanley can range from a few thousand dollars to more than $1 million, depending on a points system that takes into account factors like seniority, the number of messages sent, and whether the person has been warned before, according to the Financial Times.

The bank is now providing employees with training on how to shift conversations from personal devices to official work platforms like email, according to the FT.

Last year, Morgan Stanley agreed to pay $200 million in fines to the Securities and Exchange Commission and the Commodity Futures Trading Commission. A dozen other banks, including Barclays Plc, Goldman Sachs Group Inc. and UBS Group AG, have paid similar levies, with total penalties in the matter cresting $2 billion.

The probe has also prompted some wider changes at Deutsche Bank AG. The management board has agreed to take a 75,000-euro ($81,200) cut to their 2021 bonuses, and the bank has introduced a new app that allows employees to retrieve messages on company phones.

JPMorgan Chase & Co. has cut the 2021 pay package for asset- and wealth-management head Mary Erdoes, citing "internal, SEC and CFTC investigations into the firm's compliance with certain record preservation requirements." The firm disclosed the pay cut in a filing for 2022.

Wall Street is in hot water for using WhatsApp, and this explainer will tell you why. WhatsApp is a messaging app that is known for its end-to-end encryption, which means that messages are private and can only be read by the sender and the recipient. However, Wall Street firms have been using WhatsApp to communicate with clients, and this has raised concerns about the security of those messages. In addition, WhatsApp has been accused of being a platform for misinformation, and there are concerns that Wall Street firms may be using it to spread false or misleading information to clients.

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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