Morgan Stanley Pays $10 Million Penalty
Morgan Stanley & Co. Inc. agreed to a $10 million settlement with the Securities and Exchange Commission for failing to maintain and enforce effective policies preventing its employees from engaging in insider trading. "Due to a systemic breakdown in this critical compliance function, Morgan Stanley failed to conduct any surveillance...
June 30, 2006 at 06:32 AM
3 minute read
The original version of this story was published on Law.com
Morgan Stanley & Co. Inc. agreed to a $10 million settlement with the Securities and Exchange Commission for failing to maintain and enforce effective policies preventing its employees from engaging in insider trading.
“Due to a systemic breakdown in this critical compliance function, Morgan Stanley failed to conduct any surveillance of a massive number of employee accounts held at the firm and trading in certain securities in those and other accounts,” the SEC said in a statement June 27.
The SEC also charged that the company's written policies failed to provide those responsible for monitoring insider trading with adequate guidance.
“Establishing and enforcing adequate written policies and procedures to detect potential insider trading at securities firms is vital,” Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in a statement. “Firms must devote sufficient resources and attention to this critical area. Neglecting this compliance function is not an option.”
The settlement agreement also requires Morgan Stanley to retain an independent consultant to conduct a comprehensive review of the firm's insider trading policies and procedures. The company also will review activity in all accounts and securities that it failed to track for the past four years and report any evidence uncovered of illegal trading to the SEC.
“Due to a systemic breakdown in this critical compliance function,
The SEC also charged that the company's written policies failed to provide those responsible for monitoring insider trading with adequate guidance.
“Establishing and enforcing adequate written policies and procedures to detect potential insider trading at securities firms is vital,” Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in a statement. “Firms must devote sufficient resources and attention to this critical area. Neglecting this compliance function is not an option.”
The settlement agreement also requires
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