Defendant Name: Morgan Stanley Smith Barney LLC

Defendant Type: Subsidiary of Public Company
Public Company Parent: Morgan Stanley
SIC Code: 6211
CUSIP: 61744644

Initial Case Details

Legal Case Name In the Matter of Morgan Stanley Smith Barney, LLC
First Document Date 14-Feb-2017
Initial Filing Format Administrative Action
File Number 3-17845
Allegation Type Investment Advisers/Investment Companies

Violations Alleged

Other
• Section 206(4) Advisers Act; Rule 206(4)-7 Advisers Act

Resolutions

First Resolution Date 14-Feb-2017

Related Documents:

IA-4649 14-Feb-2017 Administrative Proceeding
Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
On February 14, 2017 the SEC instituted a settled order against Morgan Stanley Smith Barney, LLC. According to the SEC: "From mid-2010 to mid-2015, Morgan Stanley Smith Barney, LLC ("MSSB") solicited advisory clients with over 600 non-discretionary advisory accounts to purchase single-inverse exchange-traded funds ("ETFs"), without implementing MSSB's written compliance policies and procedures, which were designed to prevent violations of the of the Advisers Act, including its antifraud provisions. [...] MSSB's failure to adequately implement its compliance policies and procedures was a violation of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder."
2017-46 14-Feb-2017 Press Release--Administrative Proceeding
Morgan Stanley Settles Charges Related to ETF Investments
On February 14, 2017 the SEC announced in a press release that Morgan Stanley Smith Barney had "agreed to pay an $8 million penalty and admitted wrongdoing to settle charges related to single inverse ETF investments it recommended to advisory clients." According to the SEC: "Morgan Stanley did no adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs."