The Financial Industry Regulatory Authority (FINRA) is investigating Morgan Stanley’s investment banking analyst program in Budapest, which was launched two years ago, Portfolio reported. The investigation was launched following a report by a former employee. The individual alleges that the Budapest analysts engaged in activities requiring a license in the United States and the United Kingdom without the proper authorizations, The Wall Street Journal reported.
The Wall Street Journal reported that in the summer of 2024, the bank hired seven young European professionals as investment banking analysts at its Budapest office. According to the article, the core concept was to
outsource the development of financial models, the preparation of presentations, and transaction support to the Hungarian capital, where labor costs are lower.
These tasks are typically performed by entry-level employees in the New York or London headquarters, who are paid significantly more. The team has since expanded to about forty people. Analysts in Budapest reportedly earned roughly 1,500 euros per month. This is only one-third to one-half of salaries in London or New York, although the cost of living is also lower in the Hungarian capital. Salaries for new hires have since risen to around 1,700 euros. In addition to the salary, another major draw of the position was that recruiters held out the prospect of a transfer to the bank’s New York or London headquarters after two years of good performance, the paper reports.
They noted that FINRA’s investigation is focused on exactly what tasks the Budapest analysts performed. They are also examining the nature of their relationships with clients and how their work was supervised. In an internal memo from 2024, the bank clearly stated that the Budapest staff
do not have a license to conduct regulated activities.
Based on the article, this includes direct contact with clients and conducting customer due diligence (KYC) processes, but they also add that according to informants, these rules were not followed in practice. Analysts were allegedly assigned KYC tasks regularly. Furthermore, in presentations prepared for clients, the Budapest analysts were listed as members of the New York and London teams, marked with American and British flags, according to the WSJ.
They wrote that working conditions also created significant tension. Hungarian analysts covering the U.S. market often worked from 1:00 p.m. until 7:00 a.m. When overtime pay costs became too high, the bank pulled an unexpected move: the bank simply eliminated the position by reclassifying the analyst role as a managerial position, meaning that under labor laws, employees were no longer entitled to overtime pay, the paper reports.
The greatest outrage, however, was sparked by an announcement made in the fall of 2025. Young professionals had previously been promised that after two years, they could be transferred to global financial hubs.
Instead, they were told: relocation is not guaranteed, the waiting period has been extended to three years, and those who do get transferred will have to start over at the bottom of the career ladder. Following the announcement, about 20% of the team immediately resigned.
Via Portfolio, Wall Sreet Journal; Featured photo: MTI/Hegedüs Róbert
