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 29-Jun-2018
Initial Filing Format Administrative Action
File Number 3-18566
Allegation Type Investment Advisers/Investment Companies

Violations Alleged

Sections 206(4), 203(e)(6), Rule 206(4)-7 Advisers Act


First Resolution Date 29-Jun-2018
Headline Total Penalty and Disgorgement

See Related Documents

Related Documents:

34-83571 29-Jun-2018 Administrative Proceeding
Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 15(b) of the Securities Exchange Act of 1934 and 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
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."
2018-124 29-Jun-2018 Press Release--Administrative Proceeding
SEC Charges Morgan Stanley in Connection With Failure to Detect or Prevent Misappropriation of Client Funds
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."

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