Morgan Stanley Fined €101 Million in Dutch Tax Case, Faces Separate FINRA Review

​Morgan Stanley has agreed to pay a €101 million fine imposed by the Dutch Public Prosecutor (OM) over alleged dividend tax evasion involving its London and Amsterdam entities. The OM stated that the matter stemmed from corporate filings "more than 12 years ago," and that the structure used enabled ineligible parties to improperly claim Dutch dividend tax rebates.

The penalty is distinct from a separate tax liability the bank settled with the Dutch Tax Administration at the end of 2024, which included accrued interest. According to the OM, domestic shareholders in the Netherlands can offset or reclaim dividend tax, while foreign investors generally cannot. Morgan Stanley accepted the fine shortly before criminal proceedings were set to begin. The bank said it was "pleased to have resolved this historical matter."

FINRA Probe Ongoing

In the United States, Morgan Stanley is also under review by FINRA for its client screening and risk assessment processes. The inquiry spans October 2021 to September 2024 and includes the wealth management division—E*Trade among them—as well as the institutional securities unit.

Regulators have requested details related to client risk scoring, reporting structures, and organizational charts. Some earlier submissions were incomplete, prompting Morgan Stanley to provide additional information.

The ongoing review follows a $1.6 million penalty issued by FINRA in February 2023 against Morgan Stanley Smith Barney LLC. The fine addressed delays in closing failed inter-dealer municipal securities trades and lapses in maintaining possession or control of securities held over 30 days. FINRA reported that 239 transactions and 247 securities were affected between 2016 and 2021. The firm updated its supervisory procedures only in 2021 and consented to the findings without admitting or denying the charges, with $1.2 million of the total allocated to the MSRB.