According to the SEC, "These proceedings arise out of MSSB's failure to adopt policies and procedures reasonably designed to prevent MSSB personnel from misusing and misappropriating funds in client accounts. From at least 2009 to the present, MSSB permitted its investment adviser representatives and registered representatives, which MSSB referred to as financial advisors ("FAs"), to initiate third-party disbursements from client accounts of outgoing wire transfers and journals of up to $100,000 per day per account based on the FA's attestation on an internal electronic form that the FA had received a verbal request from the client by phone or in-person and providing certain details about the request. While MSSB policies provided for certain reviews prior to issuing the disbursements, such reviews were not reasonably designed to detect or prevent an FA making false attestations about having received a verbal client request to transfer funds to a third-party for the FA's benefit."

On June 29, 2018, the SEC issued instituted administrative proceedings against Morgan Stanley Smith Barney (MSSB), finding that "MSSB failed to have reasonably designed policies and procedures in place to prevent its advisory representatives from misusing or misappropriating funds from client accounts. The order further finds that although MSSB's policies provided for certain reviews of disbursement requests, the reviews were not reasonably designed to detect or prevent such potential misconduct."