Morgan Stanley hits bankers with $1m penalties for messaging breaches

Firm fired two staff for messaging breaches in 2020

Morgan Stanley has hit bankers with financial penalties running up to more than $1 million (€918,000) per employee for conducting official business on WhatsApp and other messaging platforms.

The forfeitures come as the bank tries to punish employees for a scandal that tarnished the group’s reputation and resulted in it paying $200 million of regulatory fines last year.

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.

Depending on the size of the penalty, the funds have either been clawed back from previous bonuses or will be docked from future pay.


Morgan Stanley declined to comment.

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

US regulators have said bank failures to ensure that employees’ electronic communications were stored properly have impeded their investigations.

Morgan Stanley in 2020 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 at the time.

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.

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 apparently 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 so that they can be preserved. – Copyright The Financial Times Limited 2023