In the UK, the resurgent FSA brought another headline-grabbing case yesterday against David Redmond, a freight and oil trader in Morgan Stanley’s Commodities Division in London. The FSA’s report states that on February 6, 2008, “Mr Redmond took an extended lunch break between 13.14 and 16.41 and it appears that this affected his behaviour on his return to the office, although he was not visibly drunk.”
His inhibitions apparently diminished or dashed altogether, Redmond then proceeded to make a huge number of trades:
Between 17.04 and 19.37 on 6 February 2008, Mr Redmond sold 24,868 lots and bought 19,493 lots of WTI Futures on the ICE web-based trading platform, WebICE. His trading represented over 30% of the total lots of WTI Futures traded on ICE on 6 February 2008. His short position reached 8,900 lots at 18.36. By 19.37, Mr Redmond had a substantial net short position of 5,395 lots.
Redmond then left the office without attempting to inform his managers or any of his colleagues about the substantial short position he had created, breaching Morgan Stanley’s risk management systems and exposing the firm to the risk of incurring a significant loss. Interestingly, Redmond was able to close out his short position the next day at a small profit.
The FSA was not impressed with Redmond’s trading feat, however, and banned him from the industry for at least two years. As the website Solicitr.com put it, however, “Although [Redmond] scored himself a ban, mutterings of ‘legend’ can be heard in pubs across the City.”