Whoops! Morgan Stanley Retracts Brokers’ Direct Deposits
[Story updated in fifth paragraph to say deposits are expected to be restored by Saturday, July 11.]
Scores of Morgan Stanley brokers who checked their bank accounts Friday morning learned that their direct-deposit monthly commission checks for June were deposited and immediately withdrawn by the wirehouse, according to sources at the firm.
While brokers struggled to get through to a compensation help line, Morgan Stanley around 10 a.m. alerted its sales force that it was working to resolve a computer glitch involving pay vendor Automatic Data Processing, according to a broker in the Southwest.
“They paid me and then took it back,” said the broker, who spoke on condition of anonymity.
A Morgan Stanley spokeswoman declined to comment, and a spokesperson at ADP did not return a request for comment.
As of late Friday afternoon, the payments had not been redeposited but ADP had informed Morgan Stanley that it had resolved the glitch, said a person familiar with the situation. “We are monitoring closely and expect that deposits will be transmitted this evening and will be available by [Saturday] morning,” the person said.
The issue affects brokers whose pay was deposited into Morgan Stanley Bank accounts, not those that use third-party banks, said an internal source familiar with the issue. The source would not estimate how many of the firm’s 15,400 use the company’s “AAA” bank account, but several advisors said it is a common choice because of the ease of signing up for the intercompany pay deposit.
The glitch goes beyond a vendor technology issue, some advisors said, because they ended up with negative bank account balances created by pre-scheduled mortgage and other payments due on the tenth of the month.
Morgan Stanley and other firms have been touting the efficiency of their operations and infrastructure performance throughout the coronavirus work-from-home period that began almost four months ago. Morgan Stanley brokers and customers, however, lost viewing access to accounts and some order-routing capabilities for several hours on March 26.
The firm has reimbursed customers who were affected by the trading outage, which the firm attributed to a problem with IBM software.
Friday’s malfunction was not the first that a major brokerage firm has attributed to ADP. UBS in 2019 clawed back some broker pay and reimbursed others for underpayments due to payroll processing errors.