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FSA bans former Merrill Lynch trader

The FSA has banned Alexis Stenfors, a former proprietary trader at Merrill Lynch International Bank, from performing any function in relation to any regulated activity on the grounds that he is not a fit and proper person.

Stenfors was employed as a senior trader on the short term interest rate trading desk of the London branch of MLIB.

The FSA says he deliberately mis-marked the positions he traded on behalf of MLIB between mid-January 2009 and mid-February 2009 by more than £66m  ($100m) in order to avoid showing increasing losses in his books.  

These actions caused MLIB to make a negative adjustment of more than £300m ($456m) to its books and records.

MLIB was fined almost £2.5m (€2.75m) in October 2009 by the Irish Financial Regulator for failures in respect of circumstances that included Stenfors’ mis-marking.

The FSA says as Stenfors co-operated fully, expressed remorse for his actions and agreed to settle at an early stage, the regulator will revoke the prohibition order after five years in the absence of any new evidence that he is not fit and proper.

FSA director of enforcement and financial crime Margaret Cole says: “Stenfors’ actions in deliberately mismarking his positions fell far short of the FSA’s expectations. Market confidence is likely to be damaged by sudden and unexpected write downs and revaluations of securities. Financial instruments must be priced correctly by traders, particularly in more challenging conditions and when it comes to illiquid products.

“We have banned Stenfors because his misconduct was deliberate, frequent and repeated over a one month period. He was a senior and experienced trader who held a position of trust at the firm. He betrayed the trust placed in him by the firm and demonstrated that he is not fit and proper to be approved by the FSA.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Isn’t it interesting there is no mention of any sanction against MLIB by the FSA.

    Contrast this with the situation had Alexis Stenfors worked as a trader for a smaller organisation. Had this been the case I would warrant the regulator would have been in their throwing it’s weight about, castigating the directors, telling them that they didn’t have sufficiently robust systems and procedures in place and that their company needed to completely overhaul it’s whole compliance procedures. The company would have been fined and probably a couple of directors would have been declared unfit persons also. In short a great song and dance would have taken place crowing about how ‘tough’ the FSA was.

    Companies such as Merrill Lynch can and do move markets but appear to be much less regulated than small businesses with no effect on markets.

  2. “MLIB was fined almost £2.5m (€2.75m) in October 2009 by the Irish Financial Regulator for failures in respect of circumstances that included Stenfors’ mis-marking.”

    So, Mr Harding, what would you have the FSA do? No doubt, if they had fined MLIB, you would be crying “double jeopardy” and bemoaning the heavy-handed regulator for punishing the firm for something it had already been penalised for.

  3. I am originally from serbia and if that had happened they would have actually Lynched the man…….!

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