Top Morgan Stanley commodities executives leave for WhatsApp breach: Sources

NEW YORK (BLOOMBERG, REUTERS) – The two most senior commodities executives at Morgan Stanley are leaving after compliance breaches linked to the use of communications tools such as WhatsApp, according to two people familiar with the matter.

Nancy King, global head of commodities, and Jay Rubenstein, head of commodities trading, are leaving, the people said, asking not to be named discussing internal matters. Morgan Stanley declined to comment.

The bank is one of the biggest commodities dealers on Wall Street alongside Goldman Sachs Group, JPMorgan Chase & Co and Citigroup.

The veteran executives’ departures come after the bank discovered the use of unauthorized electronic means of communication, including the use of the WhatsApp messaging app. It didn’t find any wrongdoing, but the use of those communication channels went against policy, the people said.

Commodity trading brokers across the world commonly use messaging services including WhatsApp, WeChat and Intercontinental Exchange (ICE) chat to communicate with traders who put in orders and execute trades.

However, Wall Street banks have clamped down on the use of WhatsApp and other instant messaging platforms in recent months. Messages on the WhatsApp service are encrypted from start to finish, and can’t easily be monitored by compliance departments.

BP terminated four trading and operations staff responsible for Chinese crude oil sales as a result of an internal investigation into trades with Singapore’s Hontop Energy. One of the sources said that a factor behind the terminations at BP was improper use of the WeChat messaging platform as a tool for commercial discussions with counterparties.

JPMorgan earlier this year punished more than a dozen traders for using WhatsApp at work, firing one and cutting bonus payments for the rest.

Banks, oil majors and commodity merchants have long had strict compliance rules when it comes to communications and several sources have expressed concerns about being monitored by companies when using chat services.

Shell Trading, for example, records and monitors communications, including those by phone, internet messenger, e-mail and other channels, for legal, regulatory and business purposes, where it is legally permissible to do so.

Ms King joined Morgan Stanley 34 years ago, trading oil and rising through the commodities division to become the most senior woman in the business on Wall Street. Mr Rubenstein, who many considered her likely successor, joined in 2007 to trade power and later became head of power and gas, according to their LinkedIn profiles.

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