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Morgan Stanley And The Rogue Trader

As worldwide financial markets continue to flounder, money markets look like stalling again and shareholders are suffering from falling stock prices, the last thing you need is a loose cannon, a rogue trader in the midst. However, that is what has happened at Morgan Stanley with news that a rogue trader has been caught concealing losses of some $120 million!

While the rogue trader episode is currently being investigated by the FSA, Morgan Stanley had the pleasure of today informing shareholders that profits have declined by some 60% in the second quarter. While the figures were a little better than some experts had predicted, they were somewhat overshadowed by news of the potential $120 million write-off, not to mention possible repercussions from the regulators.

Details of the massive cover-up are a little patchy although there will be greater clarity over the coming days and weeks. Thankfully the trader involved has been identified and suspended but there are question marks about how one person could cause so much trouble acting alone. Are we on the verge of another Nick Leeson affair? Has Morgan Stanley been caught napping of the regulatory side?

Could there possibly be a worse time to announce such a shock to the market?

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