No question as to where the top brass at Morgan Stanley stand on the issue of financial market abuse. The bank is a staunch supporter of the FSA new “get tough” policy.
Already this month alone we have seen a MOST credit derivatives trader, Matthew Piper, fined £105,000 and banned for life, while the bank then shopped a hapless commodities trader, David Redmond, who momentarily lost $10m in a post-lunch alcoholic haze. He landed a two-year ban.
Now we learn that a MOST equity trader, Nilesh Shroff, has been declared not to be “fit and proper” and fined £140,000 for a practice the FSA calls “pre-hedging.”
This, it transpires, is actually “front-running” — the age-old brokerage scam of dealing ahead of a customer whose order is known.
In Shroff’s case, the trader took details of a programme trade planned by “Mr B” at “Customer A” and then sent out waves of orders on behalf of the bank before executing the customer’s trades.
The 6,500 word final notice is available here.