Morgan Stanley fined its employees up to $1 million for using unauthorized communication channels in violation of recordkeeping rules, according to multiple reports.
Penalties levied against employees ranged from a few thousand dollars to as much as $1 million for using social messaging apps like WhatsApp to discuss company business, according to reports from the Financial Times and Wall Street Journal.
Eleven banks and investment firms, including Morgan Stanley, were fined a total of $1.8 billion by the Securities and Exchange Commission and Commodity Futures Trading Commission in September for “widespread and longstanding failures” in monitoring, maintaining, and preserving electronic communications by employees. Morgan Stanley was fined a total of $200 million as part of the crackdown. The enforcement sweep began with a combined $200 million fine against JPMorgan Chase by the regulators in December 2021 for similar transgressions.
Regulators noted off-channel communications by employees at the financial firms was pervasive. They discovered a pattern of violations among all levels of employees, including high-level managers who were supposed to be setting and enforcing the firm’s recordkeeping policies.
Failure to collect and maintain such records not only violated federal securities laws but also the financial institution’s own policies and procedures, regulators noted.
Morgan Stanley did not respond to a request for comment.
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