On January 12, 2024, the SEC instituted settled administrative and cease-and-desist proceedings against Morgan Stanley & Co. LLC, stating: "This matter involves fraudulent conduct perpetrated by two employees on Morgan Stanley’s Equity Syndicate Desk in the Americas (“Syndicate Desk”) involving large blocks of stock that the investment banking firm purchased from investors."

On January 12, 2024, the SEC stated that: ''[It] charged investment banking giant Morgan Stanley & Co. LLC and the former head of its equity syndicate desk, Pawan Passi, with a multi-year fraud involving the disclosure of confidential information about the sale of large quantities of stock known as “block trades.” The SEC also charged Morgan Stanley with failing to enforce its policies concerning the misuse of material non-public information related to block trades."

The Commission ordered that: "A. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, the Passi Fair Fund is created so that the civil penalty paid by Passi can be distributed for the benefit of harmed investors; B. . . . the Morgan Stanley Fair Fund is created so that the civil penalty paid by Morgan Stanley can be added to the disgorgement and prejudgment interest paid by Morgan Stanley for distribution for the benefit of harmed investors; C. The Passi Fair Fund is consolidated with the Morgan Stanley Fair Fund for purposes of distribution administration; and D. . . . the Division will submit a Proposed Plan of distribution for the consolidated Fair Fund by February 28, 2025."

The Commission stated: "Notice is hereby given . . . that the Division of Enforcement has submitted to the Commission a proposed plan of distribution (the "Proposed Plan") for the distribution of monies paid in the above-captioned matters."

The commission stated: "The Division of Enforcement submits this Proposed Plan of Distribution (the "Plan") to the United States Securities and Exchange Commission (the "Commission") pursuant to Rule 1101 of the Commission's Rules on Fair Fund and Disgorgement Plans (the "Commission's Rules"), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair Fund (the "Morgan Stanley Fair Fund") comprised of disgorgement, prejudgment interest, and civil money penalties paid by Morgan Stanley & Co. LLC ("Morgan Stanley") and Pawan Kumar Passi ("Passi" and collectively with Morgan Stanley, the "Respondents") pursuant to the Orders the Commission issued in the above-captioned matters."

The Commission ordered that: "the Proposed Plan is approved, and the approved Modified Plan of Distribution shall be posted simultaneously with this order on the Commission’s website at www.sec.gov."

The Commission stated that "the Plan seeks to compensate investors (the "Selling Shareholders") for losses on their sales of blocks of shares of the Securities, as defined below, in the transactions listed on Exhibit B to the Plan (the "Transactions") resulting from the conduct described in the Orders, as calculated using the methodology detailed in the Plan of Allocation (attached as Exhibit A) . Based on records and expert analysis obtained by the Commission staff during and after its investigation, the Commission staff has identified the harmed investors and has calculated each investor's harm."