This was an entirely familiar story, with the wrong name attached.
A former Morgan Stanley trader has been fined £140,000 and banned by the City watchdog after he traded ahead of clients to profit from their orders. It was the third punishment linked to the bank in the past month.Nilesh Shroff engaged in so-called "front running" where a dealer, knowing a client's plans, trades in the same direction before they conduct the client's order in a n attempt to move the price and profit from the difference between the two values.
The Financial Services Authority said on Tuesday that Mr Shroff, a senior trader at the bank, "disadvantaged" clients on seven occasions between June and October 2007 by partially front running their deals.
It was the third such trading-related punishment linked to Morgan Stanley in the past three weeks. Earlier this month, the bank paid a £1.4m fine - the tenth largest ever meted out by the regulator - for weak systems and controls that allowed a credit derivatives trader, Matthew Piper, to cover up his losses for six months. Mr Piper was himself fined £105,000 and banned.
Look, people. If you want to do that sort of thing you need to head over to Goldman. The act of front running in such a place as Morgan Stanley debases a time-honored profession. One is reminded of watching the occasional idiot wearing a tux to Shake Shack, or perhaps a grand wedding reception... at Trump Tower. An astute sense of place and time should govern these things. At the very least you should consider limiting your front running to cherry-picking orders from your high-speed, low-drag, captive-quant hedge fund.
Obviously the practice is quite above Morgan Stanley traders, who seem to have mashed the keyboard sufficiently to get caught with their pants down. Leave that work to the professionals, folks.
FSA fines Morgan Stanley trader [The Financial Times]
Posted by guest , May 26, 2009 11:11AM
Sad to watch people who are too stupid to pull off a scam. Absolutely fantastic analogy with the tux at the Shake Shak! LOL!
Mack must be soooo proud of his flock.....
Posted by guest , May 26, 2009 11:12AM
Hey that was funny!
Posted by guest , May 26, 2009 11:26AM
Hilarious, EP! I hope everyone is taking notes as info comes out on why MS-London is having so many "human risk problems" to begin with. What is going on at MS-London that makes their own employees want to cheat? I'm guessing that rainmakers are praised and lesser traders are publicly humiliated. Humiliation will make any trader go "Jeff Macke" on you.
Posted by guest , May 26, 2009 11:34AM
The whole place is corrupt. They must have missed a payment to the London Politicos! Same crap in New York, just better bag men I guess.....
Posted by guest , May 26, 2009 11:51AM
He is ex-Goldman, and he did get away with the scam for four months, before being caught at the seventh time of asking.
Posted by Debter , May 26, 2009 11:51AM
elliot spitzer remains unimpressed
Posted by guest , May 26, 2009 11:54AM
more Morgan Stanley UK madness
http://thereformedbroker.com/2009/05/24/morgan-stanley-uk-is-party-central/
Posted by guest , May 26, 2009 12:05PM
@7- that was covered here last week, but thanks for playing.
Posted by guest , May 26, 2009 12:16PM
Shroff? Never seen a brown dude get caught with hand in cookie jar before.
Posted by guest , May 26, 2009 12:36PM
don't front - you know i gotcha opin
Posted by guest , May 26, 2009 3:04PM
So on point!
I guess Goldman is allowed to front run because there is only 1 degree of separation from Goldman and anyone involved in the US government.
Never has a firm lied, cheated and stealed and got away with so much. Maybe that's why Obama likes them so much. Cut from the same cloth. Or it could just be that $889 million they donated to him. Pay to play.
Folks should also watch how the CDS/Structured product market trades...ruh roh...