Trader banned for concealing $10m bet after long boozy lunch
The financial regulator has banned a former Morgan Stanley trader for concealing a bet he took after a long boozy lunch that could have cost the bank $10m (£6.5m).
By Telegraph Staff
Last Updated: 4:36PM BST 20 May 2009
telegraph.co.uk
David Redmond, who traded freight and oil in London for the bank, returned from the three-and-a-half hour lunch and built up a substantial short position which he concealed overnight. This left the bank exposed to a significant loss, the Financial Services Authority (FSA) said.
"He drank alcohol over lunch and it appears that this affected his behaviour on his return to the office, although he was not visibly drunk," the FSA said in a statement.
The next day, rather than telling the company about his bet, he traded out of the position. Mr Redmond, who is now 28, only admitted concealing the position when directly challenged by Morgan Stanley.
Margaret Cole, director of enforcement at the FSA, said Mr Redmond’s conduct on 6 and 7 February 2008 showed "a lack of honesty and integrity".
"Having created a large short position which he tried to hide overnight, Redmond continued to get his priorities seriously wrong when he focused on trading out of the position rather than telling his managers," she said. "Traders must not seek to conceal their positions from their firms.”
The FSA took into account that the trading took place over two days rather than an extended period and that there was no risk to consumers. It also said Mr Redmond had expressed remorse, admitted his actions, co-operated with the investigation and his behaviour appeared "out of character and unpremeditated".
As a result, the FSA has indicated that it is likely to agree to an application from Mr Redmond to lift the ban after two years, provided there is no further evidence of misconduct.
The FSA said it make no criticisms of Morgan Stanley, which promptly identified and investigated the issue and took swift action against Mr Redmond. He was suspended by the firm on 7 February 2008 and subsequently dismissed.
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