Morgan Stanley expects to pay a $200 million penalty connected to “the use of unapproved personal devices and the Firm’s record-keeping requirements,” the bank said in its second-quarter earnings report Thursday.
The disclosure follows warnings Citi, Goldman Sachs and HSBC all issued in their annual reports in late February. Citi, for example, said it was cooperating with an investigation of several firms by the Securities and Exchange Commission (SEC) “regarding compliance with record-keeping obligations for broker-dealers and investment advisers in connection with business-related communications sent over unapproved electronic messaging channels.”
Morgan Stanley’s $200 million figure is based on discussions the bank has had with the SEC and the Commodity Futures Trading Commission (CFTC), Bloomberg reported Thursday.
The amount mirrors what rival JPMorgan Chase agreed to pay the two regulators in December over failures to maintain and preserve written communications, between January 2018 and November 2020, involving employees using unofficial channels such as WhatsApp or personal devices to send texts and emails about company business.
The expected $200 million charge helped to push Morgan Stanley’s second-quarter total non-interest expenses Thursday to $9.71 billion — a 4% decrease year over year and quarter over quarter — but higher than the $9.53 billion analysts had predicted, according to Bloomberg.
Overall, the bank posted a profit of $2.5 billion Thursday — a 29% decline over 2021’s comparable quarter. That figure was driven by a 55% drop in investment-banking revenue, the company reported.