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Industry Spotlight > Wirehouse Firms

Morgan Stanley Takes $70M Charge for Tax-Reporting Errors

By Hugh Son

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Morgan Stanley said it took a $70 million charge tied to tax-reporting errors by its brokerage business from 2011 to 2016.

A provision to cover that charge increased 2016 non-compensation expenses by a similar amount, the New York-based firm said Monday in an annual regulatory filing.

Morgan Stanley is in “advanced discussions” with the IRS to resolve any client tax underpayments, according to the filing.

The company said it will notify any customers that may have overpaid taxes and reimburse them. [The issues are related to errors in cost-basis figures.]

“We are committed to making this right for our clients with minimal inconvenience to them,” Wesley McDade, a spokesman for the bank, said in an e-mailed statement.

Separately, Morgan Stanley said it could incur a loss of about 209 million euros ($221.3 million) as a result of a 2016 lawsuit filed by the Austrian state of Salzburg involving fixed-income and commodities derivatives transactions from 2005 to 2012.

Salzburg alleged that it had lacked the capacity and authority to enter into such deals, according to the filing. Morgan Stanley has disputed that claim.

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