American Multinational Investment bank Morgan Stanley has been fined £ 5.4 million ($6.9m) after energy traders within the bank were found to have conducted business discussions via Whatsapp on their personal phones, a breach of rules mandating the recording of messages linked to energy trading activities.
The fine marks a significant milestone, as it’s the first instance of a financial firm being penalised under the transparency rules. These rules have been put in place to safeguard consumers from potential market manipulation and insider trading, thus ensuring the integrity of energy trading practices.
The fine was initially set at £ 7.7 million, but Morgan Stanley chose to settle the case, resulting in a 30% reduction in the final amount to be paid. The settlement highlights the bank’s willingness to address issues and collaborate with regulators to resolve the matter.
Despite the institution establishing policies prohibiting employees from using platforms like WhatsApp for business-related communications, the bank fell short in preventing the policy breach. This omission raises questions about the efficacy of the bank’s internal controls and commitment to upholding communication standards.
By law, financial firms are obligated to record and retain digital communications relating to wholesale energy product trading. This measure is designed to enhance transparency and thwart market manipulation.
The fine against Morgan Stanley serves as a clear warning to other financial institutions, emphasising the importance of adhering to communication regulations and data privacy. With technology continuing to reshape business communications, financial institutions need to be vigilant in maintaining compliance and protecting consumers’ interests and market integrity.