Morgan Stanley fined $1 million over bond transactions

The Financial Industry Regulatory Authority has handed down a $1 million fine to Morgan Stanley Smith Barney and Morgan Stanley & Co.

The regulator has also ordered $188,000 in restitution, plus interest. FINRA says the bank failed to provide best execution in customer transactions involving corporate and agency bonds.

It adds the bank also failed to provide fair and reasonable prices in certain customer transactions involving municipal bonds. The requirement to pay restitution is in addition to restitution Morgan Stanley paid previously to customers for transactions covered by this settlement.

FINRA found Morgan Stanley failed to use reasonable diligence to ensure the purchase or sale prices to customers were as favorable as possible under current market conditions in more than 100 customer transactions involving corporate and agency bonds.

Additionally, in 165 transactions involving municipal bonds, the bank failed to purchase or sell bonds at prices reasonably related to the fair market value of the subject security.

“Firms must ensure that customers who buy and sell securities (including corporate, agency, and municipal bonds) receive execution prices that are consistent with prices available in the marketplace. FINRA will continue to sanction firms that execute fixed income transactions for their customers at unfair prices, and will require firms that violate such standards to reimburse customers,” says Thomas Gira, executive vice president of FINRA Market Regulation.

In concluding this settlement, Morgan Stanley neither admitted nor denied the charges. It consented to the entry of FINRA’s findings.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.