Oops: Morgan Stanley Fined (Again & Again & Again)

From AdvisorOne:

The Securities and Exchange Commission on Wednesday charged Morgan Stanley Investment Management with violating securities laws in a fee arrangement that repeatedly charged a fund and its investors for advisory services they weren’t actually receiving from a third party.

…The SEC’s investigation found that MSIM–the primary investment advisor to The Malaysia Fund–represented to investors and the fund’s board of directors that it contracted a Malaysian-based sub-advisor to provide advice, research and assistance to MSIM for the benefit of the fund, which invests in equity securities of Malaysian companies. However, the SEC say, “the sub-advisor did not provide these purported advisory services, yet the fund’s board annually renewed the contract based on MSIM’s representations for more than a decade at a total cost of $1.845 million to investors.”

…Furthermore, the SEC said, “MSIM’s oversight and involvement with AMMB during the relevant time period were wholly inadequate. MSIM had no written procedures specifically governing its oversight of sub-advisers, and did not have a procedure in place for reviewing work done by AMMB.”

Morgan Stanley was fined more a little more than $3.3 million for these transgressions. And this news comes on the back of Morgan also being fined $1million for excessive bond markups to clients just last week. And two weeks ago, they were fined for shilling bonds as conservative that they knew would fail.

What kills me about this stuff is how blatant it is: excessive markups, designing products to fail, & not actually rendering services are not mistakes; they’re a giant middle finger waving in the air.

And how much of a wrist slap do these fines represent? Basically, we are talking about an overnight rounding error for these banks.

I’m telling you people; until we pull our money from these firms, this stuff is never gonna stop.


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