Morgan Stanley Smith Barney Paid $15 Million Over Failures to Prevent and Detect Adviser Theft

Summary

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