Morgan Stanley Fined $15M by SEC for Failing to Prevent Client Fund Theft

The settlement involves allegations that four financial advisors stole millions, exploiting gaps in the firm's oversight policies.

Morgan Stanley agreed to pay a $15 million penalty to settle SEC charges related to the theft of client funds by four former financial advisors.
The SEC found that the firm lacked adequate policies to detect unauthorized transfers, including ACH payments and specific cash wire transfers, between 2015 and 2022.
The financial advisors, based in Texas and California, made hundreds of unauthorized transactions, transferring funds to themselves or for personal benefit.
Morgan Stanley has compensated affected clients and retained a compliance consultant to review its third-party cash disbursement procedures.
The settlement includes a cease-and-desist order, censure, and commitments to improve oversight and safeguard client assets.