Morgan Stanley to Pay $3.3M Over Puerto Rican Bonds
A regulatory panel cited the wirehouse's failure to share documents concerning “a key employee” with investors and their lawyers.
A regulatory panel says Morgan Stanley must pay Puerto Rican bond investors $3.3 million, citing its failure to share documents concerning “a key employee” and denying the claimants information “highly relevant to the dispute in question.”
The Financial Industry Regulatory Authority’s three-member panel made the decision earlier this week in Miami.
The arbitration panel noted “the extreme prejudice” Morgan Stanley’s compliance failure caused the investor’s counsel in preparing their case, namely the withholding of documents “which the panel deemed were highly relevant to the dispute in question.”
Separately, UBS was ordered to pay some $5 million to investors over issues tied to Puerto Rican Bonds and closed-end funds last week. A nearly $8 million arbitration award was ordered in May.
In March, an ex-UBS advisor was sentenced to a year in prison for taking $1 million from investors in Puerto Rico through a fraudulent scheme involving the use of credit lines to buy closed-end bond funds.
The legal conflicts emerged after Puerto Rico effectively went bankrupt in 2013.
“We strongly disagree with the panel’s award of monetary sanctions in this case, which we believe are unwarranted and excessive,” Morgan Stanley said in a statement.