Morgan Stanley hit with £5.41m fine after energy traders used WhatsApp to discuss market transactions
Morgan Stanley & Co. International plc (MSIP) has been fined £5.41 million by Ofgem for “not recording and retaining electronic communications between January 2018 and March 2020” after the firm’s wholesale energy traders used WhatsApp on their private phones to discuss energy market transactions.
Morgan Stanley fined £5.41m by Ofgem
Ofgem says the breach was brought to light following Morgan Stanley’s “responses to information requests made using the information collection powers Ofgem has under the REMIT Enforcement Regulations”.
Its investigation found that although Morgan Stanley had instated policies that prohibited the use of WhatsApp for trading communications, it had failed to comply with these policies in addition to external regulatory requirements.
It is the first recordkeeping fine of its kind in Great Britain that relates to trading wholesale energy products, and mirrors the recent activity of the US Securities and Exchange Commission (SEC), which recently handed penalties to 11 Wall Street firms for similar offences.
As well as admitting to the breaches and agreeing to pay the fines, Morgan Stanley has put in place measures to ensure that it doesn’t repeat the same mistakes, including “enhanced staff training and the strengthening of its internal systems and controls”.
For its full co-operation, Ofgem deducted 30% of the original penalty.
“It is unacceptable that MSIP 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,” says Cathryn Scott, regulatory director of enforcement and emerging issues at Ofgem.
“This fine sends a strong message to market participants that they must comply with all REMIT rules or face enforcement action.”
