London, UK: The American multinational investment bank and financial services company, Morgan Stanley, has been fined $6.83 million by the UK’s energy regulator.
Ofgem, the energy regulator for the UK, said that the company has breached rules that require firms to record messages relating to trading wholesale energy.
The banking company had discussions with traders over WhatsApp between January 2018 and March 2020. This is the first fine to be issued under transparency rules intended to protect consumers from market manipulation and insider trading.
Insider trading is the buying and selling of a listed company’s shares or other securities, such as bonds or share options, based on information that is not available to the public, as per the statement.
The energy regulator stated that Morgan Stanley’s failures were “unacceptable.” It was mentioned that the fine could have reached $9.7 million, but the bank opted to settle the case and received a 30 percent discount.
Traders are not allowed to have private chats on WhatsApp because the platform uses encryption. Banks must retain all communications and provide them to regulators when requested.
Ofgem noted that the investment bank had policies against using WhatsApp for trading communications. However, it failed to take sufficient measures to ensure both staff compliance with its own policies and adherence to regulatory requirements.
In several countries, such as the US and UK, insider trading is prohibited because it provides an unfair advantage to individuals who have access to confidential information.
According to the energy regulator, Morgan Stanley had admitted the failings and the bank had strengthened its “internal systems and controls” and trained staff to avoid future breaches.
TOP PICK | Commonwealth Bank receives historic $3.55mn fine for violating spam laws
