The United States Securities & Exchange Commission has actively worked towards implementing penalties during the COVID-19 Pandemic. The most recent applied towards the Morgan Stanley Wealth Management Division, which received a $5 million penalty for misleading clientele with incorrect information on the “Retail Wrap Fee Program”. PR Representatives with the Securities & Exchange Commission revealed that this division of Morgan Stanley would regularly inform clientele to engage with third-party brokerage contracts, claiming it’d provide better executions. What followed was clientele being charged higher transaction fees.
The Morgan Stanley Wealth Management Division operates with assets exceeding past $2 Trillion, serving multiple corporations and financial institutions worldwide. Traders inflicted by the actions of this division have claimed the penalty is minimum in comparison to their overall assets. It should be noted that this New York, Wall Street-Established broker hasn’t denied or confirmed their involvement.
The Securities & Exchange Commission also issued the Wealth Management Division with a “Cease & Desist Order”, demanding that the Retail Wrap Fee Program be terminated immediately. SEC found that Morgan Stanley was also providing investment and trade execution advice through a “Transparent Fee Structure”, which essentially meant an increased cost. It was determined that clients engaging with this service would spend thousands more than those who weren’t registered for the RWFP. Promotional advertisements from Morgan Stanley also were falsified, giving clientele the impression, they’d pass less than the standard investor. Under all these criminal actions, this brokerage house should’ve received a considerable fine.
Penalty Order Details Revealed
Details in the penalty order demand that Morgan Stanley’s Wealth Management Division distribute funds to investors that were harmed by this program. This will force the brokerage to lose an influx of traders, with a return on their investment confirming that Morgan Stanley had broken financial law.
The Associate Director with SEC’s Division of Enforcement, Melissa Hodgman, provided a formal statement on her commission’s decision. She remarked: “Investment advisers are obligated to fully inform their clients about the fees that clients will pay in exchange for services. The SEC’s order finds that Morgan Stanley Smith Barney failed to provide certain clients in its retail wrap fee programs accurate information about the costs they incurred for the services they received.”
The History of Morgan Stanley
Morgan Stanley is one of the most influential financial institutions worldwide, providing investors with a Wealth Management Firm and Global Investment Bank. Their services have allowed for more than 60 thousand to be employed, with three primary divisions enforcing their various products. Those divisions include Institutional Securities, Investment Management, and Wealth Management.
Those divisions are slated to increase by one, with Morgan Stanley moving forward with the purchase of ETrade. By purchasing this online financial institution, blockchain products will be enforced by Morgan Stanley. It cost the Wall Street Bank $13 billion to acquire this notable cryptocurrency exchange, with their respective return including a new customer base of 5.2 million clientele. This will enable Morgan Stanley’s position in worldwide markets to grow drastically once the acquisition period is concluded. This acquisition also will return Morgan Stanley to the highest-ranked Wall Street Bank, placing their competition like Wells Fargo and Bank of America far behind them.