Morgan Stanley (NYSE: MS) showed four traders the door after they reportedly tried to hide between $100 million and $140 million in trading losses, according to Bloomberg.
Four traders were fired from Morgan Stanley for allegedly mismarking securities that concealed a nine-digit loss, Bloomberg reported. The employees were part of the foreign exchange trading desk and the loss was linked to an emerging market currency.
Bloomberg opinion journalist Elisa Martinuzzi said on Bloomberg TV that the size of the loss is consistent with an "ordinary day's business."
It remains unclear when the losses took place, how the losses were discovered and by whom. The bank will also be interested in looking at if its internal systems were operating as expected.
Why It's Important
Morgan Stanley's probe into the reported wrongdoings is part of a growing frequency of "misconduct cases in the U.S. and Europe in recent years," Angela Gallo, a finance lecturer at Cass Business School, told Bloomberg.
The amount of effort in large organizations to reduce misconduct appears to be lacking and "more fundamental changes are required," she said.
Some of the traders involved in the alleged wrongdoing have senior rankings at Morgan Stanley and are tasked with overseeing trading desks valued in the billions, Martinuzzi said. If accurate, this would "clearly be a worry" for the bank, she said.
The stock was down 0.6% at $49.48 at the close Friday.
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