Morgan Stanley CEO James Gorman has barely greater than two weeks left in his nearly 14-year tenure on the helm of the Wall Street giant — and lots of the rank and file are counting the times.
That’s because junior bankers are hoping to catch a break after weathering greater than a yr of harrowing interrogations and punishing fines stemming from a clampdown by the Securities and Exchange Commission for doing business on messaging apps in breach of record-keeping rules.
Out of $2 billion levied by the SEC across nearly a dozen US banks, Morgan Stanley was slapped with a $125 million wonderful in September 2022 — and Gorman took unusual measures to take it out of the hide of employees quite than investors, sources said.
Insiders at Morgan Stanley describe a “witch-hunt” atmosphere since early 2022 when the probe was first announced.
A whole bunch of bankers were interrogated in lawyers’ offices about whether or not they’ve used personal devices to text their colleagues and managers, in line with sources.
“After we got an email saying ‘legal desires to talk’ we thought it will be training not punishment,” a Morgan Stanley source griped.
CEO James Gorman and his successor Ted Pick. Paola Morrongiello
Fines ranged from just a few thousand dollars to as much as $1 million.
Many complained they were fined without being given adequate training or warnings, and that offenses in some instances seemed trifling.
Some claim they got dinged for answering the phone when their boss called or responded to benign messages about work completely satisfied hours.
By comparison, Goldman also paid $125 million and JPMorgan was fined $200 million.
But those banks weren’t as aggressive about nickeling and diming individual employees, sources said.
The Securities and Exchange Commission has imposed fines on banks for doing business on messaging apps in breach of record-keeping rules. Christopher Sadowski
Those that were ousted had either knowingly violated policies or when asked hadn’t been honest.
“It was more in regards to the cover up,” one source said.
Goldman fired former global head of transaction banking over WhatsApp misuse.
JPMorgan fired Edward Koo — who’d been on the firm twenty years — for reportedly starting a WhatsApp chat dedicated to “market chatter.”
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Other members of the group were slapped with a wonderful but kept their jobs.
One former banker at Jefferies was fined nearly $50,000 after which resigned after bragging in a text message that a deal he was working on would repay his mortgage.
At Morgan Stanley, terrified bankers are hoping the air will clear on Jan. 1, when Ted Pick — a veteran trader who’s “loved by the foot soldiers,” in line with a source — takes the reins from Gorman because the bank’s latest CEO.
“Culture and loyalty are essential to him,” the source said of Pick, adding that many are specifically hoping that may mean an end to the texting clampdown.
In fact, some sources near the bank caution there was no official change to policy in terms of collecting fines.
Sources say that Gorman has been on edge because the bank lost nearly $1 billion after family office Archegos melted down in 2021.
The loss has pushed Gorman to consider in stricter protocols, sources said.
The Archegos meltdown was “the worst loss in my tenure in over a decade that we’ve had,” Gorman said. “There have been warning signs and you understand this was a miss on our part.”
Still, some insiders say the time could also be ripe for a lighter touch at Morgan Stanley in terms of coping with the talent.
“The simplest plan of action for managers is to make things as restrictive as possible,” a source told On The Money. “In fact, that’s not the neatest approach to make employees completely satisfied.”
