(Bloomberg) — Morgan Stanley will pay $15 million to settle claims that its Smith Barney unit failed to prevent four former employees from stealing millions of dollars from client funds, the Securities and Exchange Commission said Monday. USA.
The broker/dealer's inadequate policies failed to detect hundreds of unauthorized transfers between May 2015 and July 2022 from the accounts of its clients or customers, according to the regulator.
The firm, an arm of New York-based Morgan Stanley, settled the allegations without admitting or denying them. It agreed to hire a compliance consultant to review recent internal changes to prevent fraud.
The firm described the actions of the former financial advisers and registered representatives as isolated events.
“We take these incidents very seriously and have since improved our control framework, working in conjunction with an external expert,” a Morgan Stanley spokesman said in a statement. “We pride ourselves on putting customers first and in every case, when we learned of wrongdoing, we conducted an internal investigation, shut down the wrongdoers, reported them to the appropriate authorities, and worked with affected customers to compensate them for any damage.”
The SEC said the resolution takes into account the firm's self-reporting and cooperation with agency staff and its remedial efforts.