Morgan Stanley has put a $200 million price tag on its staff’s habit of conducting business from personal phones. The bank disclosed the fine in its earnings in mid-July 2022, describing it as a penalty for “the use of unapproved personal devices” and for inadequate record keeping.
It is the second such bill on Wall Street in about seven months. US regulators imposed a similar fine on JPMorgan earlier, after finding that even managing directors and other senior supervisors had slipped past oversight by using WhatsApp or personal email addresses for work.
What the JPMorgan finding said
The SEC spelled out the problem in the JPMorgan case. Its investigation found that “employees often communicated about securities business matters on their personal devices, using text messages, WhatsApp, and personal email accounts. None of these records were preserved by the firm as required.”
SEC Chair Gary Gensler framed the rule in blunt terms. “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,” he said.
Citigroup is also under scrutiny. The bank said in February that regulators were looking at its use of “unapproved electronic messaging channels.”
The same fight in government
Banks are not alone in struggling to pull staff off WhatsApp and Telegram. With remote work, organisations and governments around the world have found the convenience hard to beat.
In March 2022, transparency campaigners told the UK’s third-highest court that British ministers were practising “government by WhatsApp,” with self-destructing messages sent “on insecure platforms.” The Good Law Project, which brought the case, argued that “vast sums of public money pass hands following deals cooked up, in whole or in part, through these untraceable channels.” It tied the practice to the pandemic response and the awarding of government contracts.
The High Court sided with the ministers. On April 29, 2022 it found that ministers, civil servants and unpaid government advisers had used WhatsApp widely, including its auto-delete function, but that no legal duty barred them from doing so. The 1958 Public Records Act set no binding requirement, the court said, and left a “wide margin of discretion to the relevant body.” Cabinet Office guidance, it added, explicitly urged the use of instant messaging.
Getting people to comply
David Loseby, a behavioural scientist who has led software adoption programmes for multi-billion procurement efforts, told The Stack that rules fail when breaking them carries no penalty. His fix: block the unwanted apps on work devices, attach sanctions with real “teeth” to personal-device use, and offer a better approved platform as a reward. He also suggested telling clients and service providers that contacting staff through unauthorised channels puts them at risk too.
