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April 11, 2024 at 03:07 PM
Morgan Stanley shares fell the most in five months after a report that a cadre of U.S. regulators are scrutinizing the firm’s efforts to prevent potential money laundering by wealthy clients.
The Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices are digging into whether the New York-based bank has done enough to investigate the identities of risky clients, the Wall Street Journal wrote, citing unidentified people familiar with the matter.
The Federal Reserve was already known to be looking into those controls last year.
The stock fell 5.3% to $86.84 during regular trading in New York on Thursday, its biggest drop since mid-October. A Morgan Stanley spokesperson declined to comment.
The SEC and the Treasury’s Financial Crimes Enforcement Network have sought information on certain clients outside the U.S. who’ve raised red flags and the bank’s policies to address it, the Journal said.
Specifically, the SEC pressed Morgan Stanley about why it did business with some who had been cut off by E*Trade, the digital-trading platform the company acquired.
The inquiries, which haven’t been publicly disclosed by the bank, focus on a wealth management arm that has swelled into Morgan Stanley’s biggest business, generating almost half of the company’s revenue last year.
