Morgan Stanley Agrees to $400,000 Settlement with FINRA

Morgan Stanley Wealth Management has reached a settlement agreement with the Financial Industry Regulatory Authority (FINRA), which includes a $400,000 fine. This settlement addresses multiple compliance failures that occurred between May 2018 and July 2022. During this period, the firm provided inaccurate or incomplete trade confirmations to non-institutional customers, failing to properly disclose the mark-ups and mark-downs on approximately 19,000 transactions involving municipal securities and corporate debt. This lack of transparency violated FINRA's Rules 2232 and 2010, as well as the Municipal Securities Rulemaking Board (MSRB) Rule G-15.

Additionally, Morgan Stanley did not meet disclosure requirements for about 535,000 transactions. This included the failure to provide the time of execution and security-specific URLs that link to publicly available trading data for approximately 35,000 municipal securities transactions and 500,000 corporate or agency debt securities transactions. These omissions contravened MSRB Rule G-15 and FINRA Rules 2232 and 2010.

The settlement also uncovered deficiencies in Morgan Stanley's supervisory systems. The firm was found to have failed to establish, maintain, and enforce adequate written supervisory procedures (WSPs) designed to ensure compliance with MSRB and FINRA rules. Consequently, this breach of MSRB Rule G-27 and FINRA Rules 3110(a) and 2010 resulted in the imposition of the fine and a censure from FINRA.