WASHINGTON: Morgan Stanley agreed to pay a $3.6 million fine after regulators found it failed to have systems in place to help it detect and prevent the misappropriation of client funds, the US Securities and Exchange Commission said. Since 2009, Morgan Stanley has allowed brokers to initiate wire transfers of as much as $100,000 from a client’s brokerage account into a third-party account so long as the adviser reported on an internal digital form that the client had requested the transfer. The brokerage required some additional information and had policies in place allowing it to review some disbursement requests, the SEC said.
But the regulator said the policies were insufficient in preventing one broker from misappropriating $5 million worth of clients’ money without their permission between December 2015 and November 2016. Former Morgan Stanley broker Barry Connell was arrested in February 2017 and faces criminal charges in a federal court in New York related to the misappropriations. His case is pending. — AFP
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