Morgan Stanley has agreed to pay $19 million to settle charges by the New York Stock Exchange of supervisory and operational failings and to meet claims against former broker Carlos Soto.
Soto, who was based in Puerto Rico, is alleged to have stolen $56 million in customer funds.
The $19 million fine and public censure relates to Morgan's failure to deliver prospectuses to customers in registered offerings. The settlement also covers systems deficiencies that resulted in inaccurate reporting of certain program trading information, short sale violations, failures to fingerprint new employees to ensure that they were not subject to a statutory disqualification; and failure to timely file Exchange Forms RE-3.
The supervisory and operational failings at the firm impacted on several business areas and went undetected for substantial periods of time, says Nyse regulation executive vice president of enforcement Susan Merrill.
"Operational failures and supervisory lapses are a dangerous combination, as demonstrated by this case," she says. "We're issuing a wake-up call for member firms to take meticulous inventory of their systems and procedures to ensure they have strict controls designed to protect the investing public."