Experts question whether Morgan Stanley’s $1m Whatsapp spot fines will work
Morgan Stanley has hit some of its bankers with heavy fines for conducting official business on Whatsapp, the Financial Times reported today.
But experts have questioned whether dishing out penalties to the bank’s staff really solves the problem of keeping bank’s internal communications in line with financial regulators’ expectations.
Depending on the seriousness of the offence, Morgan Stanley could fine offending employees anywhere from a few thousand dollars to more than $1m (£810,000) per person, the Financial Times reported.
The funds have either been pulled back from previous bonuses or will be docked from future pay, depending on the scale of the punishment, according to the report.
Morgan Stanley was contacted for comment on the report.
The internal fines come after a Wall Street-wide crackdown on the use of private messaging services in conducting official business, a crackdown that saw the US Securities and Exchange Commission (SEC) hand out $1.8bn worth of fines to 16 lenders including Goldman, Citi, and Morgan Stanley, which paid a $200m dollar fine.
The UK’s Financial Conduct Authority has also quizzed bank chiefs in the UK on the use of Whatsapp, suggesting the UK regulator could follow the SEC’s example in fining firms for messaging breaches.
The use of private messaging services such as Whatsapp makes it more difficult for regulators to review communications in the event they need to investigate, and the practice is said to have become a particular problem during the pandemic when more financial services staff worked from home.
Oliver Blower, chief executive of communications analytics company Voxsmart, said the latest fines are “the most ridiculous development in the entire debacle.”
“The banks are fining employees who have not been given the tools to do their job properly,” he said. “Surely it is better to give individuals the tools they need than go through this public humiliation.”
Blower struggled to comprehend why banks hadn’t already implemented wide-ranging reforms to their messaging platforms.
Similarly, Alex Viall, from corporate data management firm Global Relay said “forcing staff to pay such fines isn’t the most effective way to prevent this from being a problem.”
“Whilst it’s promising to see Morgan Stanley take such a hard stance on the issue, to truly mitigate this risk we need to see banks focus on making Whatsapp compliant, instead of trying to stamp it out entirely,” he said.