Morgan Stanley is penalizing individual bankers for conducting company business on messaging platforms such as WhatsApp, in connection with an investigation by regulators that drew $1.8 billion in fines last year from 11 Wall Street institutions.
The bank is either clawing back funds from previous bonuses or deducting money from future pay — in penalties that range from a few thousand dollars to more than $1 million per employee, the Financial Times reported Thursday. Bloomberg and The Wall Street Journal later confirmed the development.
Penalties are scored according to a points system that considers the number of messages sent, the banker’s seniority, and whether they received prior warnings, sources briefed on the matter told the publication.
Morgan Stanley holds training sessions explaining when bankers should move exchanges on personal devices to company platforms such as email, the Financial Times reported. Even messages about the time or location of a meeting can fall under the record-keeping requirements of the Securities and Exchange Commission and Commodity Futures Trading Commission because those tete-a-tetes can lead to more material discussions, according to a person familiar with the training.
Morgan Stanley warned last July that it anticipated paying a $200 million penalty in connection with the record-keeping probe, the results of which were published in September.
The personal penalties come as Morgan Stanley looks to control costs after a year in which it saw revenue fall 10% and profit dip more than 26%. The bank cut 1,600 jobs in December.
Morgan Stanley fired at least two of its top commodities traders in 2020 over their use of personal messaging apps, the Financial Times reported. Credit Suisse and HSBC have also dismissed bankers connected to the scandal, according to the publication.
Other banks have put the burden of the scandal’s fallout on management. Deutsche Bank’s management board agreed to cut their 2021 bonuses by €75,000 ($81,200), and the bank introduced an app that allows personal messages to be accessed on company phones, according to Bloomberg.
JPMorgan Chase cut the 2021 pay package for Mary Erdoes, its asset- and wealth-management chief in connection with “internal, SEC and CFTC investigations into the firm’s compliance with certain record preservation requirements,” according to a 2022 filing seen by the wire service. JPMorgan had agreed to pay $200 million to the regulators in December 2021, months before last fall’s 11-bank sweep.
Morgan Stanley declined to comment to the Financial Times on the individual penalties.