Late last month, the SEC announced the institution and simultaneous settlement of an enforcement action against Morgan Stanley (Morgan Stanley & Co. Incorporated and Morgan Stanley DW Inc.). The SEC action alleged that Morgan Stanley failed to maintain and enforce adequate written policies and procedures to prevent the misuse of insider information in its possession.
According to the SEC, Morgan Stanley failed to conduct any surveillance of a massive number of employee accounts held at the firm and trading in certain securities in those and other accounts. The SEC also indicated that Morgan Stanley's written policies failed to provide adequate guidance to Morgan Stanley personnel charged with conducting surveillance, and the company employed inadequate controls with respect to certain aspects of its Watch List (companies about whom Morgan Stanley was in possession of material non-public information).
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