Morgan Stanley (NYSE: MS) received a multi-million-pound penalty from Ofgem due to its energy traders’ negligence in logging conversations regarding wholesale market deals on WhatsApp.
Between January 2018 and March 2020, the bank did not archive communications on the messaging platform. This resulted in a £5.4 million fine, though it was initially set at £7.7 million, reduced for their cooperative stance.
Ofgem’s enforcement director, Cathryn Scott, commented, “Morgan Stanley’s oversight in not archiving electronic dialogues is impermissible. Such lapses threaten the transparency and trustworthiness of the wholesale energy markets.”
Although Morgan Stanley had set policies restricting the use of WhatsApp for trade-related conversations, they weren’t duly enforced.
Annually, energy trades in the wholesale market account for billions of pounds, with contracts being traded multiple times before the energy reaches the end consumer. In 2022, Statista reported that the selling value of electricity and gas for UK consumers was £59.8 billion and £46.7 billion, respectively.
In the year’s first quarter, Morgan Stanley reported nearly US$4.5 billion in trading revenue, a 12% increase from the previous year, encompassing other commodities as well.
This penalty by Ofgem is a precedent, being the first of its kind for not documenting energy trading interactions.
