Morgan Stanley has incurred a hefty fine of £5.4m over instances of its traders discussing market transactions using WhatsApp on their private mobiles.
This marks a historic moment as it’s the first-ever penalty of its kind imposed in Great Britain, specifically under the legal stipulations that mandate recording and retaining e-communications linked to the trading of wholesale energy products.
Ofgem’s investigation revealed that Morgan Stanley had set policies forbidding the use of WhatsApp for trading conversations. However, the bank seemingly fell short in implementing reasonable measures to monitor adherence to these regulations.
It’s noteworthy that earlier this year, details surfaced about Morgan Stanley levying millions of dollars in fines on its own bankers. This internal disciplinary action was taken against those found using WhatsApp for business transactions, in defiance of a broader regulatory clampdown on the messaging app’s use in the corporate world.
Accepting the breaches that spanned from January 2018 to March 2020, Morgan Stanley has promised to implement enhanced staff training and fortify its internal systems and mechanisms.
Ofgem’s regulatory director of enforcement and emerging issues, Cathryn Scott, stated, “It is unacceptable that Morgan Stanley failed to prevent electronic communications which could not be recorded or retained. It risks a significant compromise of the integrity and transparency of wholesale energy markets.”
Interestingly, this fine – which incorporated a 30% markdown due to the bank’s agreement to resolve the matter – aligns with a global trend. Regulators across the globe are intensifying their scrutiny on traders utilising personal mobiles for market transaction discussions.
Recently, financial giants Wells Fargo and BNP Paribas also encountered multi-million dollar fines from US authorities over analogous infractions. This follows the SEC’s September move to impose a collective fine of $1.1bn on heavyweights like Bank of America, Citi, and Goldman Sachs.
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