Morgan Stanley

Morgan Stanley agreed in February 2016 to pay $2.6 billion to the U.S. Department of Justice to resolve federal claims concerning residential mortgage-backed securities. DOJ investigated Morgan Stanley's packaging, marketing, sale, structuring, arrangement and issuance of RMBS between 2005 and 2007. Under the settlement, Morgan Stanley acknowledged the facts set out in an agreed Statement of Facts. The resolution addressed potential federal legal claims arising from the creation and sale of mortgage securities in the period preceding the financial crisis. Primary source: https://www.justice.gov/archives/opa/file/823671/dl?inline=

Morgan Stanley agreed to pay a $2.6 billion penalty over its marketing, sale and issuance of residential mortgage-backed securities. It acknowledged failing to disclose critical information about loan quality and due diligence and securitizing thousands of loans despite information indicating serious defects. Source: https://www.justice.gov/archives/opa/pr/morgan-stanley-agrees-pay-26-billion-penalty-connection-its-sale-residential-mortgage-backed

In December 2024, the U.S. Securities and Exchange Commission charged Morgan Stanley Smith Barney LLC with failing to reasonably supervise four financial advisers who stole millions of dollars from advisory clients and brokerage customers. The SEC found that the firm lacked policies and procedures reasonably designed to prevent certain unauthorized ACH payments and wire-transfer patterns. According to the order, this contributed to failures to detect hundreds of unauthorized ACH transfers between May 2015 and July 2022. Without admitting or denying the SEC's findings, Morgan Stanley Smith Barney agreed to a censure, compliance undertakings and a $15 million civil penalty. The firm had previously reached settlements compensating affected customers and clients. Source: U.S. Securities and Exchange Commission https://www.sec.gov/newsroom/press-releases/2024-193

In January 2024, the U.S. Securities and Exchange Commission charged Morgan Stanley & Co. LLC with a multi-year fraud involving confidential information about large stock sales known as block trades. The SEC found that from at least June 2018 through August 2021 Morgan Stanley employees disclosed non-public, potentially market-moving information about impending block trades to selected buy-side investors despite sellers' confidentiality requests. Those investors could use the information to pre-position ahead of the trades. The SEC also found failures in Morgan Stanley's information barriers. Morgan Stanley agreed to approximately $138 million in disgorgement, approximately $28 million in prejudgment interest and an $83 million civil penalty. A parallel Justice Department resolution required more than $153 million in financial penalties, with offsets between the resolutions. Sources: U.S. Securities and Exchange Commission https://www.sec.gov/newsroom/press-releases/2024-6 U.S. Department of Justice https://www.justice.gov/usao-sdny/pr/us-attorney-announces-agreements-morgan-stanley-and-former-senior-employee-pawan-passi