(Bloomberg) -- Morgan Stanley will pay $15 million to settle claims that its Smith Barney unit failed to prevent four former employees from stealing millions of dollars from customer funds, the US Securities and Exchange Commission said Monday.
The broker dealer’s inadequate policies failed to detect hundreds of unauthorized transfers between May 2015 and July 2022 from its customers’ or clients’ accounts, according to the regulator.
The firm, an arm of New York-based Morgan Stanley, settled the allegations without admitting to or denying them. It agreed to hire a compliance consultant to review recent internal changes to prevent fraud.
The firm described the actions of the former financial advisers and registered representatives as isolated events.
“We take these incidents very seriously and have since enhanced our control framework, working in conjunction with an outside expert,” a Morgan Stanley spokesperson said in a statement. “We pride ourselves on putting clients first, and in each instance, when we learned of the wrongdoing, we conducted an internal investigation, terminated the wrongdoers, reported them to the proper authorities and worked with affected clients to compensate them for any harm.”
The SEC said the resolution takes into account the firm’s self-reporting and cooperation with agency staff and its remedial efforts.
--With assistance from Sridhar Natarajan.
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