Turmoil at Morgan
Traders axed for hiding losses: sources
Morgan Stanley fired or placed on leave at least four traders over an alleged mismarking of securities that concealed losses of between $100 million and $140 million, according to informed sources
Morgan Stanley is investigating the suspected mismarking, which was linked to emerging-market currencies, said the people, who asked not to be identified as the details are private. Tom Walton, a spokesman for the New York-based firm, declined to comment.
The traders who have been identified as part of the probe include Scott Eisner and Rodrigo Jolig, both based in London, and two senior New York-based colleagues, Thiago Melzer and Mitchell Nadel, the sources said. Eisner, Jolig, Melzer and Nadel didn’t respond to requests for comment. Their ultimate employment status isn’t yet clear, but at least some of them are leaving the bank, the sources said.
Melzer was given responsibility for foreign exchange and emerging-markets Americas trading in March.
Eisner was managing orders for the Central and Eastern Europe, Middle East and Africa currency book, according to his LinkedIn profile.
In so-called mismarking, the value placed on securities doesn’t reflect their actual worth.
The scope of the probe at Morgan Stanley includes currency options that give buyers the right to trade at a set price in the future, enabling them to both speculate and hedge against potential losses.
Morgan Stanley’s currency options desk has struggled this year amid a slump in the volatility that generates profits for traders.
The Wall Street firm booked some of the losses in the third quarter, one of the people said.
The probe shows “the amount of effort still needed in these large organizations to reduce episodes of misconduct,” said Angela Gallo, a finance lecturer at Cass Business School.