Morgan Stanley Smith Barney was just fined $450,00 for allowing a trader to amass a $1.3 billion bet from 2006 to 2009, Bloomberg’s Laura Marcinek and Donal Griffin report.
Regulators have become more sensitive to this kind of activity since a massive position taken by (mostly) one trader in JP Morgan’s London Chief Investment Office ultimately cost the bank $5.8 billion this year.
In short — They’re trying to prevent another London Whale.
In this case, Jared Weinryt, the trader, breached his trading limit of $116 million betting on futures overnight. As a result, Morgan Stanley lost $14.9 million.
Weinryt’s futures bets totaled about $744 million at the end of the trading day on July 14, 2009, exceeding his $116 million limit, according to a document posted on Finra’s website. His bets swelled to about $1.33 billion as he continued trading overnight, the document shows.
The market turned against Weinryt the next morning and he tried to reduce the bets, incurring losses, according to Finra. The brokerage cut off Weinryt’s access to the trading system in late morning on July 15 and liquidated the contracts by the next day. Total losses were $14.9 million, Finra said.
Weinryt was fined $7,500 for his actions earlier this year. He now works for the in the institutional fixed-income sales division of Florida firm Kiley Partners Inc.,.