LONDON (Reuters) - The financial regulator fined U.S. bank Morgan Stanley (MS.N) 1.4 million pounds for failings that led to a $120 million (79.2 million pound) markdown to the books of a former senior proprietary trader.
The Financial Services Authority said on Wednesday the fine for systems and controls failings related to trader mis-marking, which led the bank to make the negative adjustment last June.
The regulator banned Matthew Sebastian Piper, a former proprietary trader, and fined him 105,000 pounds.
Morgan Stanley failed to effectively control his dealing in illiquid financial products in credit markets and failed to ensure adequate supervision of Piper’s books and, as a result, did not price certain positions accurately.
It also failed to prevent or detect the mis-marking in a timely manner, the FSA said.
Piper deliberately mis-marked the positions he traded on behalf of Morgan Stanley and sought to hide losses by manipulating processes to monitor trading activity, it added.
Piper was dismissed by Morgan Stanley in September and the bank said its response had been prompt and comprehensive and it now considered “this matter to be behind us.”
Piper was a senior and experienced trader and his misconduct was “deliberate, frequent and repeated over a six-month period,” the FSA said.
The regulator said Morgan Stanley cooperated with the investigation, which reduced its fine.
Reporting by Steve Slater; editing by John Stonestreet