Morgan Stanley Faces Reduced Fine for Full Cooperation in Ofgem’s Recordkeeping Probe

Ofgem disclosed that the infraction was identified due to Morgan Stanley’s compliance with specific data gathering mechanisms enabled by the REMIT Enforcement Regulations.

The inquiry determined that although Morgan Stanley had established internal protocols to prevent the use of WhatsApp for discussions related to trading, the firm failed to abide by both these internal rules and external compliance norms.

This constitutes the first-ever fine in the UK focused on recordkeeping issues associated with wholesale energy product trading. It parallels recent punitive measures taken by the U.S. Securities and Exchange Commission against several Wall Street entities for similar non-compliance.

To mitigate future occurrences, Morgan Stanley has not only agreed to pay the fines but has also enacted new safeguards. These include intensifying employee training and reinforcing existing compliance systems and protocols.

Because of Morgan Stanley’s complete collaboration during the inquiry, Ofgem reduced the initial financial penalty by 30%.

Cathryn Scott, who oversees enforcement and emerging issues at Ofgem, commented, “The failure by MSIP to halt unrecordable electronic conversations is inexcusable. It undermines the overall integrity and transparency of energy markets at the wholesale level.”