Morgan Stanley said in its earnings this week that it has been fined $200 million over “the use of unapproved personal devices” and inadequate record keeping, according to The Stack’s report in mid-July 2022. The account does not say which agency issued the penalty.
The record gives some context. Seven months earlier, US regulators fined rival JPMorgan on similar grounds. The SEC said its investigation turned up staff who talked securities business over text messages, WhatsApp and personal email, with none of it preserved as required. Even managing directors and other senior supervisors were among those who had avoided scrutiny that way.
Citigroup said in February that it, too, is facing scrutiny for use of “unapproved electronic messaging channels.”
The regulator’s position
SEC Chair Gary Gensler put the expectation plainly: “As technology changes, it’s even more important that registrants ensure that their communications are appropriately recorded and are not conducted outside of official channels in order to avoid market oversight.”
A wider problem than banking
The same habit has reached public office. In March 2022, the Good Law Project took British ministers to the UK’s third-highest court, claiming that widespread use of self-destructing messages “on insecure platforms” was unlawful and undemocratic. The group said the practice touched the pandemic response and the awarding of government contracts, and warned that “only last week it was revealed that private channels used in Number 10 had been hacked.”
The High Court ruled against the campaigners on April 29, 2022. It accepted that ministers, civil servants and unpaid government advisers had used WhatsApp widely, auto-delete included, yet found no legal duty to avoid either. There was legitimate public interest in keeping such messages, the court said, but the 1958 Public Records Act imposed no binding requirement. The Good Law Project called the outcome “a decision with profoundly troubling consequences for those with interests in transparency, national security, and public record-keeping.”
What an expert would try
Behavioural scientist David Loseby told The Stack that people ignore rules when they expect no punishment for breaking them. He favours blocking unwanted apps from work devices, enforcing sanctions with real “teeth,” and offering staff an approved platform that works better. Weaning employees off a favoured app, the publication noted, is a difficult art.
