Morgan Stanley Agrees to Pay $100,000 N.J. Fine
Following a settlement of the same issue with the Financial Industry Regulatory Authority (FINRA) in April 2012, Morgan Stanley has reached an agreement with the New Jersey Bureau of Securities for violations of "state securities laws and regulations in its sale of non-traditional Exchange-Traded Funds [ETFs] to investors," according to the New Jersey Office of the Attorney General.
Though Morgan Stanley did not admit to the attorney general's findings, it has agreed to make restitution totaling $100,000. The fine consists of $65,000 in civil penalties, $10,000 for "investor education," and $25,000 to reimburse the attorney general's office for investigative costs, according to the settlement. The $100,000 fine follows the $96,940.34 in restitution Morgan Stanley has already paid to New Jersey investors.
The investigation found several violations, including that Morgan Stanley didn't provide adequate training to its advisors, failed to implement a systematic process to monitor ETF sales, and allowed its advisors to solicit the sale of ETFs to unsuitable investors.
Abbe Tiger, chief of the New Jersey Bureau of Securities, commented, "In this matter, we found that Morgan Stanley's staff lacked proper training about non-traditional ETFs, and that the company failed to adequately supervise its personnel handling ETF transactions, to the detriment of investors."
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