Morning Coffee: Morgan Stanley’s method of reducing bonuses could catch on. High earning men are bored of working so much
It's not just Morgan Stanley that's being pursued by regulators for its employees' (mis)use of WhatsApp messages. When the SEC announced $1.1bn of fines for "communications about business matters" on unapproved messaging platforms last September, those fines applied to Bank of America, Citi and Goldman Sachs. Morgan Stanley was fined $200m a few months previously. JPMorgan had been fined $200m the previous year.
Other banks seem to have absorbed their WhatsApp fines without much fuss, but the news yesterday that Morgan Stanley has decided to recoup them by collecting the money from its errant employees will have a certain appeal.
The boundaries between permissible WhatsApp messages and WhatsApp messages constituting business communications are perpetually blurred. Last June, HSBC let go of a trader who'd seemingly been discussing Asian trades with London-based brokers, something that's reportedly been the norm for a while but that would incontrovertibly also seem to amount to business-related chat. Equally, though, Business Insider suggested in September that if you're at Bank of America and you were to text a client to say, 'With you in five minutes, I’m running late', you would fall foul of the bank's policy.
Some people in banking have sent a lot of WhatsApp messages. At JPMorgan, one banker reportedly sent 2,400 to clients in a year. If banks are recouping their $200m fines from bankers themselves, it's only fair that these repeat offenders should pay a lot more than the incidental texters.
Morgan Stanley has a solution for this. Much like the complex allocation of sales credits, the FT reports that it's devised a points system that considers the number of messages sent, a banker's seniority and prior warnings given. A Morgan Stanley MD who'd sent multiple messages and ignored admonitions could be fined up to $1m. The money is being recouped from previous deferred bonuses and docked from future pay.
The FT hasn't spoken to anyone at Morgan Stanley who's suffered as a result of WhatsApp profligacy, but this may be simply because they're howling in rage in a darkened room. Headhunters tell us that in London investment banking, Morgan Stanley bonuses were down more than expected ("Good Morgan Stanley MDs were down 30% in total compensation and some were down 40%+"). Additional deductions for WhatsApp fines are not going to be popular, unless you're the bank - in which case they make perfect sense.
Separately, men aged between 25 and 39 who work the longest hours have been cutting back. The Wall Street Journal reports that a study of federal data by the economics department at Washington University in St. Louis shows that individuals in the 90th percentile for working hours have decided to work a bit less. - On average, they've cut 1.5 hours from their work weeks.
Some have cut even more. The WSJ spoke to a lawyer who now puts in 60 to 70 hours a week instead of the 80 to 90 he was doing before the pandemic. He's spending more time on childcare. “I used to feel—and a lot of dads used to feel—that just by providing for the family financially, that was sufficient. And it’s just not," he said.
More than half of Bank of America's new MDs are women or minorities. (Bloomberg)
Goldman's return on equity is erratic, veering from 33% in early 2021 to just 5% in the fourth quarter of 2022. (Economist)
After laying off 14% of its workforce in November, Stripe has told employees that it will either be taking the company public or allowing employees to sell shares in a private-market transaction within the next 12 months. (WSJ)
There won't be any job cuts in Toronto. (Reuters)
Credit Suisse dismissed most of its Mexican bankers as part of its job cuts. (Bloomberg)
Gavin Black, a former Deutsche Bank trader cleared of charges that he rigged the Libor benchmark rate is suing the bank for malicious prosecution. He wants at least $30m in damages. (Bloomberg)
PWC is accused of divulging commercially sensitive information about a client's financial position to an investment banker in 2015. The banker is then said to have shared the information with another client, who used it to submit an unusually low bid for PWC's client. PWC denies everything. (FT)
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