More On Legal & Compliancefrom The Advisor's Professional Library
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
- Advertising Advisor Services and Credentials Section 206 of the Investment Advisers Act contains the anti-fraud provision of the statute and ensures that RIAs advertising and marketing practices are consistent with the fiduciary duty owed to clients and prospective clients.
Morgan Stanley & Co. will pay the Financial Industry Regulatory authority (FINRA) a total of $12.5 million on behalf of its "former affiliate" Morgan Stanley Dean Witter, (MSDW) according to a FINRA statement issued September 27, for failing "on numerous occasions to provide emails to claimants in arbitration proceedings as well as to regulators--while representing that the destruction of the firm's e-mail servers in the September 11, 2001 terrorist attacks," which destroyed MSDW's World Trade Center offices, "resulted in the loss of all pre-9/11 email."
The FINRA statement says that "millions of pre-9/11 emails" that had been stored off-site before the attacks, and "had been restored to the firm's active e-mail system," but were not provided anyway.
In a "first of its kind" settlement, according to FINRA, $9.5 million will be distributed to "two groups of customers," which FINRA estimates to be "several thousand customers," to settle arbitration cases brought against MSDW. A separate fine of $3 million was imposed for the firm's "failure to provide pre-9/11 e-mails and updates to a supervisory manual."
Susan Merrill, executive VP and chief of enforcement at FINRA says in the announcement: "We are particularly pleased that this unique settlement directs the bulk of the monetary sanction to the customers in arbitrations, to remedy MSDW's discovery failures."
For the full statement from FINRA, please go here.