Prohibition

20 May 2009 By Jeffrey Goldfarb Follow @jgfarb

A threehour lunch has turned into a twoyear ban for a Morgan Stanley oil trader who took out a big alcoholinduced short position. Unable to explain the outsized risk, he was eventually dismissed. He may have made money but it s still a sobering tale for traders everywhere.

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David Redmond, a former Morgan Stanley freight and oil trader, was banned by the UK's Financial Services Authority on Wednesday from working in the industry for two years, after it was found that he took big positions in oil futures after a threehour lunch that involved alcohol.

While working for Morgan Stanley, Redmond drank alcohol over lunch and it appears that this affected his behaviour on his return to the office, although he was not visibly drunk, according to the FSA.

To conceal the position overnight, Redmond transferred the short position to one of his colleague's books. The next day, Redmond starting buying back futures, and eventually closed the position. The same day, Morgan Stanley began investigating the trading, and suspended Redmond. The firm dismissed him a month later for gross misconduct.

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