"This fine sends a strong message to market participants," Ofgem's Cathryn Scott said. (Representational)
UK energy regulator Ofgem on Wednesday fined US banking giant Morgan Stanley more than £5 million ($6.3 million) for failing to record and retain WhatsApp messages exchanged by its energy traders.
Ofgem hit the bank with the £5.41 million fine after concluding it did not take "sufficient reasonable steps to ensure compliance" with its own policies around UK transparency and integrity rules.
It is the first-ever fine issued in Britain under legal requirements to record and retain electronic communications relating to trading wholesale energy products.
The rules aim to protect consumers by providing Ofgem with the powers to investigate and sanction firms or individuals it believes could be involved in market manipulation and insider trading.
"This fine sends a strong message to market participants that they must comply with all... rules or face enforcement action," Ofgem's regulatory enforcement director Cathryn Scott said in a statement.
She called Morgan Stanley's failures in this area "unacceptable", noting they risked "a significant compromise of the integrity and transparency of wholesale energy markets".
The bank's wholesale energy traders discussed market transactions on privately owned phones via WhatsApp between January 2018 and March 2020, according to Ofgem.
The breach emerged in responses by the bank to information requests made using Ofgem's information collection powers.
The regulator said it found Morgan Stanley had policies in place which prohibited such communications, but that the bank admitted it had failed to adequately adhere to them.
It has subsequently taken steps to ensure the breaches do not reoccur, including enhanced staff training and the strengthening of its internal systems and controls, Ofgem added.
Morgan Stanley fully co-operated with its investigation and agreed to settle the case, allowing for a 30 percent discount on the fine, the regulator noted.
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