Paris — Morgan Stanley has been fined €20m in France over accusations that its London desk used “pump and dump” tactics to rig bond prices after a bet on the French sovereign turned sour amid Greece’s debt crisis.
At a hearing in November, AMF investigators said the bank’s London desk was long on French bonds and short on German debt, betting the yield spread would narrow. But the opposite scenario played out as the fallout from Greece’s impasse with creditors spread, causing the desk to lose $6m on June 15 2015, and another $8.7m when markets opened the next day.
During the hearing, Stéphane Bénouville, a lawyer for the bank, said the accusations didn’t stand up to scrutiny, adding that fining Morgan Stanley would send a message that market makers aren’t allowed to hedge themselves and exit risky positions.