Dive Brief:

• Morgan Stanley and JPMorgan Chase are making some of their executives and lower-level employees return a portion of their pay for using messaging apps like WhatsApp and Signal that can be configured to delete communications.
• The two banks, along with other financial institutions like Bank of America and Citigroup, were hit with large fines last year by the Securities and Exchange Commission and Commodity Futures Trading Commission for allowing employees to use the apps without preserving their communications in violation of record-keeping rules under federal securities law.
• More than a dozen institutions paid $2 billion in fines to the two agencies, an amount that regulators said was set to be attention-getting to press the point that any communications related to the companies’ business must be preserved. “As technology changes, it’s even more important that registrants appropriately conduct their communications about business matters within only official channels, and they must maintain and preserve those communications,” SEC Chair Gary Gensler said last year, when the settlements were announced.

Dive Insight:

Morgan Stanley’s settlement with the SEC set it back $200 million, among the biggest of the fines. Dozens of employees at the bank used the apps for thousands of business communications, with the knowledge of supervisors, even though company executives were aware it violated federal law.

One managing director, for example, sent and received more...

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