Morgan Stanley fined $2.1 million by UK regulator
After so-called rogue trader Matthew Piper was found to have mispriced a number of his trading positions, allowing him to successfully hide losses for some six months, his employer Morgan Stanley has been hit with a significant fine. However, the $2.1 million fine dished out by the Financial Services Authority (FSA) is dwarfed by the $120 million hit which the company was forced to take after repricing and correcting errors on the trader's book.
While Piper himself was fined $159,000 and barred from industry for life the fact the incident was allowed to happen, despite heavy internal regulations, has shocked many. At a time when the UK regulator and the UK government are determined to stamp out rogue trading and excessive risk in the financial markets, this particular incident could not have come at a worse time. Amid allegations that Morgan Stanley's risk management controls were inadequate at the time, the company has accepted full responsibility and corrected all outstanding issues and trading positions.
As worldwide stock markets continue to fluctuate we have seen an increasing number of dealing issues arising with regulators concerned that greater risks are being taken in exchange for potentially greater rewards. This, as well as the recent collapse of UK banking system, has and will lead to a significant tightening of the regulations which govern UK financial markets.
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