Morgan Stanley fines employees over unauthorized messaging services

According to two sources familiar with the situation, Morgan Stanley has imposed financial penalties on employees who used messaging platforms such as WhatsApp for company business.

The penalties ranged from several thousand dollars for some staff to more than $1 million for others. According to a source familiar with the matter, the amounts were determined by factors such as the number of messages sent, seniority and whether the employees had already received warnings.

The Financial Times reported on the penalties earlier in the day.

The move came after the lender agreed to pay $200 million to the U.S. Securities and Exchange Commission in 2021 to deal with employee communications on messaging platforms that had not been approved by the company.

Wall Street's self-regulatory body, the Financial Industry Regulatory Authority, requires broker-dealers to keep records of all business related communications. The SEC is looking into whether banks have been keeping a track of employees' digital communications.

In September, the SEC fined 16 financial firms, including major global banks, a total of $1.8 billion, after staff discussed deals and trades on their personal devices and apps. Four people familiar with the inquiry said that the investigation has expanded beyond broker-dealers to investment funds and advisers.

A source familiar with the situation said that banks that were fined have told employees that future pay and bonuses will be docked for those who have used unauthorized communication channels.

Financial firms are scouring employees' phones and personal computers in a bid to demonstrate to regulators that they are punishing breaches of communications policies, the source said.

In 2020, two senior Morgan Stanley executives left the bank after unauthorized use of WhatsApp to discuss work matters.