Morgan Stanley Settles SEC Charges Over Fraud at Smith Barney

Dec 10, 2024

The U.S. Securities and Exchange Commission (SEC) announced that Morgan Stanley will pay $15 million to settle charges related to its brokerage subsidiary, Smith Barney. The firm failed to prevent four former employees from stealing millions from clients. Due to inadequate policies, Smith Barney did not detect hundreds of unauthorized transfers between May 2015 and July 2022. Without admitting or denying the charges, the company agreed to hire a compliance consultant to review recent internal changes to prevent fraud. Morgan Stanley described these incidents as isolated and emphasized their commitment to client protection, conducting internal investigations, and compensating affected clients. The settlement considers the firm's self-reporting and remedial actions.

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