Morgan Stanley agreed Wednesday to pay nearly $8 million to settle federal fraud charges stemming from its reported failure to get retail stock investors the best prices possible on more than a million over-the-counter transactions.
The Settlement
Over roughly three years, the Securities and Exchange Commission said Wednesday in announcing the settlement, “Morgan Stanley’s automated trading system delayed the execution of orders and altered transaction prices to the company’s financial benefit without telling investors. Those actions affected more than 1.2 million trades valued around $8 billion, and Morgan Stanley received more than $5.9 million in revenue through the undisclosed changes”, the SEC said.
The trades took place from Oct. 24, 2001, to Dec. 8, 2004. Linda Chatman Thomsen, director of the SEC’s enforcement division, said in a statement that “broker-dealers must be diligent in their efforts to seek the most favorable terms for their customers orders”.
Morgan Stanley Did Not Admit or Deny Wrongdoing
A spokeswoman, Mary Claire Delaney, said “the company was pleased with the settlement and has corrected the programming issues, established new internal controls and a process for client reimbursement”.
The settlement includes reimbursement of more than $5.9 million in improperly obtained revenue, prejudgment interest of $507,978 and a civil penalty of $1.5 million, the SEC said.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
