Finance Industry Fining Employees May Not be Legal 

Passing fines onto employees in the finance industry may be on the rise. Companies such as Morgan Stanley, Goldman Sachs, and UBS that have been probed and fined recently by the SEC for misuse of personal devices. Some of these financial firms are now looking into offloading these fines onto their employees. In 2021, the SEC launched an investigation into banks to see if they had been properly monitoring their employees’ conversations regarding official business. This past September, the agency ended up fining 16 financial institutions, including some big-name banks, $1.8 billion after evidence of employees discussing business deals and trades on personal devices or apps such as WhatsApp.

Major global banks are looking to offset these fines by directly penalizing their employees. Morgan Stanley, which was forced to pay $200 million to federal regulators last year has already started fining some of its bankers more than $1 million dollars individually. They plan on penalizing their employees that were found misusing WhatsApp to conduct official business based on a grading system. The range of these individual employee fines will be anywhere from a few thousand dollars to over $1 million depending on the total number of messages sent and if these messages sent were a first offense or not. Morgan Stanley reportedly plans on deducting these fines from an employee’s future pay or requiring payment from previously earned bonuses they have received.

However, these tactics may not be legal. Docking employees’ pay, or making deductions from wages that are not to an employee’s benefit such as taxes, insurance, and other benefitsare generally illegal under state and federal wage and hour laws such as the Fair Labor Standards Act. Despite an employee potentially violating company rules (here by using outside communications tools) the company may not necessarily be entitled to deduct hefty sums from their hard-earned pay to bail them out of their fines.

Affected financial employees during this time may include but are not limited to:

• Brokers 

• Traders

• Bankers

• Investment fund Managers 

• Financial Advisors

If you work in finance and are currently being affected or targeted due to these violations, speaking to an employment attorney could be very helpful in knowing your rights. You can reach our firm, Fitapelli & Schaffer, LLP, for a free and confidential phone consultation at (212)300-0375. You can also find additional helpful information regarding your rights here.