FINRA Slaps Morgan Stanley With $1 Million Fine

The Financial Industry Regulatory Authority announced Thursday that it had fined Morgan Stanley & Co. and Morgan Stanley Smith Barney $1 million, as well as ordering restitution and interest of $371,000 to customers for excessive markups and markdowns charged to customers on corporate and municipal bond transactions, and related supervision violations.

Morgan Stanley neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. In an email statement to AdvisorOne, the company said, “Morgan Stanley Smith Barney cooperated fully with FINRA and is pleased to settle this matter. The trades in question represent a tiny fraction of the millions of trades executed for clients during the time period, and we are continuing to improve our control processes governing pricing.”

Thomas Gira, executive vice president for FINRA Market Regulation, said of the action in a statement, “Firms must ensure that customers who buy and sell securities, including corporate and municipal bonds, receive fair and reasonable prices regardless of whether a markup or markdown is above or below 5%. Morgan Stanley clearly violated fair pricing standards and FINRA will continue to require firms that violate such standards to make their customers whole.”