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.
- Do’s and Don’ts of Advisory Contracts In preparation for a compliance exam, securities regulators typically will ask to see copies of an RIAs advisory agreements. An RIA must be able to produce requested contracts and the contracts must comply with applicable SEC or state rules.
The Financial Industry Regulatory Authority announced Thursday that it has fined Morgan Stanley $1 million and ordered $188,000 in restitution plus interest for failing to provide best execution in certain customer transactions involving corporate and agency bonds, and failing to provide a fair and reasonable price in certain customer transactions involving municipal bonds.
The $188,000 in restitution is the remainder of the $452,280 that Morgan Stanley was previously ordered to pay to customers for transactions covered by this settlement.
Morgan Stanley neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
"Morgan Stanley Wealth Management is committed to seeking the best execution reasonably available for our clients," the company said in a statement. "We fully cooperated with FINRA’s investigation. The settlement involved fewer than 300 fixed-income transactions over a four-year period during which some 4 million such trades were conducted. FINRA did not allege any willful or fraudulent conduct by the firm. Morgan Stanley will make restitution to the affected clients."
According to FINRA, Morgan Stanley failed to use reasonable diligence to ensure that the purchase or sale price to the customer was as favorable as possible under current market conditions in 116 customer transactions involving corporate and agency bonds.
“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,” said Thomas Gira, executive vice president, FINRA Market Regulation, in a statement. “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.”
In addition, in 165 transactions involving municipal bonds, Morgan Stanley failed to purchase or sell bonds at prices reasonably related to the fair market value of the subject security.
Check out LinkedIn Payoff: Morgan Stanley FA Lands $70 Million Account on ThinkAdvisor.