Morgan Stanley has imposed financial penalties on employees who used messaging platforms such as WhatsApp for company business.
How fines are determined
The penalties ranged from several thousand dollars for some staff to more than $1 million per employee.
The penalties are based on a points system which takes into account factors such as the number of messages sent, the banker’s seniority, and whether they received prior warnings.
Depending on the size of the penalty, the funds have either been deducted from previous bonuses or will be docked from future pay.
Heavy price to pay
This development comes after a scandal that damaged the group’s reputation and as a result had to pay $200 million in regulatory fines to the U.S. Securities and Exchange Commission in 2021.
They had to pay up in order to resolve probes into employee communications on messaging platforms that had not been approved by the company.
The latest news comes amid a wide-ranging crackdown on Wall Street by US regulators over the use of personal phones and unapproved apps.
Keep track of employees using personal device for business
The Financial Industry Regulatory Authority requires broker-dealers to keep records of all business-related communications.
The SEC has been investigating whether lenders have been keeping a track of employees’ digital communications.
In September it had fined 16 financial firms, including major global banks, a combined $1.8 billion due to staff discussing deals and trades on their personal devices.
Other banks such as Credit Suisse and HSBC have fired bankers embroiled in the scandal too.
The probe has since broadened to go beyond broker-dealers to investment funds and advisers.
Some banks that were fined have told employees that future pay and bonuses will be docked for those found to have used unauthorized communication channels.
Financial firms are also scouring employees’ phones and personal computers in a widespread effort to show the regulators that they are punishing breaches of communications policies.
Lesson seemingly learned
Morgan Stanley now conducts training sessions explaining scenarios when they should shift conversations on personal devices to official channels such as their work email.
This can include even seemingly harmless instances where colleagues are exchanging messages about the time or location of a meeting.
This is because these apparently trivial messages often lead to more material discussions.
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.