The UK Financial Services Authority (FSA) has banned David Redmond, a former proprietary trader in freight and oil with Morgan Stanley’s London commodities division, from performing any function in relation to any regulated activity on the grounds that he is not a fit and proper person.
The FSA stated that it made no criticisms of Morgan Stanley or any other individuals at the firm. The firm promptly identified and investigated the issue and took swift action against Redmond, suspending him the day the acts in question came to light and subsequently dismissing him.
On February 6, 2008, Redmond built up a substantial short position in WTI Futures on the ICE Futures (Europe) web-based trading platform. In breach of Morgan Stanley’s policies and procedures, he then concealed the position overnight, exposing the firm to the risk of incurring a significant loss. On February 7, 2008, rather than informing the firm of his actions, Redmond traded out of the position. He admitted concealing the position only when directly challenged by the firm.
Margaret Cole, the FSA’s Director of Enforcement, in a published comment emphasized that this concealment of positions showed a lack of honesty and integrity that fell short of the standards the FSA expects of approved persons.
The FSA indicated that, based on a number of mitigating factors, it would be likely to agree to an application from Redmond to lift the ban after two years, provided there is no further evidence of misconduct.