Morgan Stanley Punishes Staff Over WhatsApp Violations – Media

Tom Burroughes

30 January 2023

Controversy over bankers’ use of messaging platforms such as WhatsApp took another turn last week amid media reports that , said in an emailed comment to this news service. “SteelEye research suggests that despite the continued levying of huge fines against those failing to effectively monitor the communications of regulated employees, most firms are not yet monitoring digital communications channels. Just 15 per cent monitor WhatsApp, and even fewer monitor Slack (9 per cent) or Signal (3 per cent). New communication channels are emerging all the time, complicating the picture for compliance professionals.”

Press reports of the Morgan Stanley case said that penalties on staff are based on a points system that considers how many messages people have sent, the banker’s seniority, and whether they received prior warnings.

"One way to avoid further scrutiny from the SEC is for firms to build a stronger relationship with regulators by being transparent and sharing non-financial risks before they become a problem. It is therefore no surprise that banks are now imposing their own penalties to spare themselves further regulatory fines in the hundreds of millions,” Smith said. "Regulators are investing in technology that allows them to identify signs of malpractice more accurately, so banks must intervene early and stay ahead of the regulator by looking forward. Firms can no longer rely on data silos and legacy systems when tools that drastically improve the efficiency of surveillance are readily available.”