Morgan Stanley Misuse of Personal Devices Costs $200 Million

(Bloomberg) — Morgan Stanley said it expects to pay a $200 million fine related to a broad US investigation into the use of unapproved personal devices.

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That amount is based on discussions the firm has had with the Securities and Exchange Commission and the Commodity Futures Trading Commission, who have been probing the matter across Wall Street.

Finance firms are required to scrupulously monitor communications involving their business. That system, already challenged by the proliferation of mobile-messaging apps, was strained further as firms sent workers home shortly after the start of the Covid-19 outbreak. Investigators have been looking into banks including JPMorgan Chase & Co, Citigroup Inc. and Goldman Sachs Group Inc.

Morgan Stanley disclosed the expense number in its second-quarter earnings statement, saying the $200 million was “related to a specific regulatory matter concerning the use of unapproved personal devices and the firm’s record-keeping requirements.” Total non-interest expenses totaled $9.71 billion, higher than the $9.53 billion analysts were expecting.

In December, the SEC and the CFTC imposed $200 million in fines on JPMorgan, saying that even managing directors and other senior supervisors at the bank had skirted regulatory scrutiny by using services such as WhatsApp or personal email addresses for work-related communication. In February, Citigroup said in a filing that it was cooperating with the SEC as the regulator investigated “communications sent over unapproved electronic messaging channels.”

The probe has caused headaches across the banking industry. Deutsche Bank AG’s management board agreed to cut bonuses given for last year’s performance, Bloomberg reported last month. HSBC Holdings Plc fired a trader in London after scrutinizing some staffers’ personal mobile-phone messages on platforms such as WhatsApp.

(Updates with investigation context starting in third paragraph.)