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January 11, 2024 at 12:54 PM
Morgan Stanley is close to an agreement to pay $200 million to $300 million to resolve a yearslong U.S. investigation into its employees’ handling of stock sales big enough to move markets, a probe that rattled major clients and reverberated across the industry.
The pact with federal prosecutors in Manhattan and the Securities and Exchange Commission could be announced in the coming days, according to people with knowledge of the situation.
The penalty will be divvied up between the Justice Department and the SEC and won’t include any criminal charges against the bank, according to the people, who asked not to be identified discussing confidential information.
That outcome would amount to less than investors’ worst fears in a probe that has hung over one of the bank’s prized units. Morgan Stanley disclosed in May that it was in talks with federal prosecutors and regulators to resolve the issue. The deal has yet to be finalized, one of the people said.
Representatives for the DOJ, SEC and Morgan Stanley declined to comment.
James Gorman, who handed off the chief executive officer role to Ted Pick this month, said in October that he wanted to leave his successor “as clean a slate as possible, and deal with a few of our outstanding issues in the next couple of months.”
The investigation into highly sensitive block trades — in which banks typically help clients buy or sell chunks of stock large enough to move prices — has focused in part on whether employees shared or misused information about impending transactions in ways that broke securities laws, people familiar with the matter have said.
Regulators have also been examining whether Morgan Stanley, which is set to report fourth-quarter results next week, had adequate internal controls to head off potential abuses.
