Morgan Stanley Fined By FINRA For Compliance Lapses

Morgan Stanley, the U.S. Wall Street firm, was fined $10 million by the Financial Industry Regulatory Authority (FINRA)  for compliance failures.

According to a report in Reuters, citing FINRA and Morgan Stanley, the firm agreed to pay $10 million after FINRA contended it had lapses in compliance for more than five years from January of 2001 until April of 2016. Morgan Stanley did not admit or deny guilt in the settlement but signed off on the entry of the findings of FINRA, the industry watchdog agency. In a statement to Reuters, Morgan Stanley said it was pleased to resolve the matter from several years ago. Reuters reported that brokerages have to have policies and procedures on the books that comply with detecting and stopping money laundering but that Morgan Stanley’s compliance fell short. According to the report, FINRA charged that Morgan Stanley automated the surveillance systems and didn’t get information from other internal systems. Those lapses hurt Morgan Stanley’s ability to track tends of billions of dollars of wire and foreign currency transfers. FINRA said some of those transactions were to and from countries that are known to have money laundering issues, FINRA noted, according to Reuters.

Other violations covered in the settlement include failing to reasonable monitor deposits of 2.7 billion shares of penny stock between 2011 and 2013, noted the report. Reuters cited FINRA as saying since 2013 Morgan Stanley has engaged in “extraordinary steps” to improve its anti-money laundering (AML) programs, such as a new system to monitor penny stock transactions and insider trading.

Morgan Stanley wasn’t the only Wall Street bank to run afoul of FINRA in recent weeks. Earlier in December the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, fined UBS  $14.5 million for what it said was a willful violation of the Bank Secrecy Act. The FinCEN said UBS failed to create and use an appropriate AML system to address the risks in accounts from both traditional brokerage and banking services.


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