Investment bank Morgan Stanley has been handed a £5.41m fine by the UK energy regulator Ofgem over breaching energy trading rules over WhatsApp messenger.
Ofgem revealed that the bank’s energy traders discussed business over WhatsApp on private phones which breached transparency rules as well as market manipulation and insider trading laws.
The fine is the first of its kind with Ofgem describing Morgan Stanley’s actions as “unacceptable” after failing to adhere to its own policies it had in place prohibiting staff from using WhatsApp for trading communications.
Ofgem charged Morgan Stanley for the activity from January 2018 to March 2020, citing the bank risked a “significant compromise of the integrity and transparency of wholesale energy markets” as it failed to record any communications that occurred during that time period.
This was a significant factor into the regulator’s penalty as it requests telecommunication records which relate to wholesale energy products if they deem it be in violation of its transparency, market manipulation and insider trading laws.
Simon Francis, Coordinator of the End Fuel Poverty Coalition, stated: “Anything which impacts on these prices is of concern. But action on this particular case should remind us about wider concerns about the role of energy market trading.
“Every act of trading energy on the markets usually results in profit for the traders and ultimately adds to our bills.”
Ofgem became aware of Morgan Stanley’s violations after requests into the bank’s information which it later admitted to its wrongdoing.
Morgan Stanley’s agreement to settle the case allowed them to receive a 30% discount on the initial fine which was slated to be £7.7m.
The regulator has since revealed that the investment bank had bolstered its “internal systems and controls” with further training to staff to avoid the same breaches in the future.
