Ofgem has fined Morgan Stanley & Co. International plc of £5.41 million for not recording and retaining electronic communications between January 2018 and March 2020. The communications were discussions about energy market transactions made by wholesale energy traders on privately-owned phones via WhatsApp.
Traders in wholesale energy products are legally required to record and retain electronic communications. These rules, which fall under the REMIT Enforcement Regulations – are designed to protect consumers and ensure market transparency and integrity by providing Ofgem the powers to investigate and sanction against market manipulation and insider trading.
The breach emerged following MSIP’s responses to information requests made using the information collection powers Ofgem has under the REMIT Enforcement Regulations.
Ofgem found that MSIP had policies in place which prohibited the use of WhatsApp for trading communications, but MSIP did not take sufficient reasonable steps to ensure compliance with its own policies and the requirements of the regulations.
MSIP has admitted the breaches between January 2018 and March 2020, and has taken steps to ensure the breaches do not happen again, including enhanced staff training and the strengthening of its internal systems and controls.
MSIP co-operated with Ofgem’s investigation and agreed to settle the case, which meant the fine was 30% less than it could have been.