Morgan Stanley fined $225,000 over questionable muni bond trades

SEC: Firm was swapping bonds for clients with no alleged benefit to the customer

Sep 19, 2019 @ 2:31 pm

By Bruce Kelly

The Securities and Exchange Commission on Tuesday said it was fining Morgan Stanley $225,000 for allegedly recommending unsuitable municipal bond transactions to its customers.

Morgan Stanley, from June 2013 through December 2017, recommended 135 swap transactions to its retail customers in which the customers sold one municipal bond while purchasing another municipal bond that was nearly identical to the bond sold or provided no apparent economic benefit to the customer, according to the SEC order.

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The SEC also found that Morgan Stanley did not document information about the customers that indicated that any of the swaps were suitable for the clients. The firm received over $340,000 in commissions and fees upon execution of the transactions, which Morgan Stanley returned, with interest, to clients.

Morgan Stanley consented, without admitting or denying the SEC's findings.

"We are pleased to have resolved this matter," said company spokeswoman Christine Jockle.

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