Morgan Stanley Smith Barney was fined $1.5 million on Thursday by the Financial Industry Regulatory Authority Inc. for technical failures, including a broken online link that prevented customers from accessing fund prospectuses.
For several years prior to 2013, Morgan Stanley made required prospectuses available to clients through an online platform.
According to the Finra settlement, Morgan Stanley in November 2013 updated its systems but failed to ensure an appropriate online link was installed for clients who wanted to review certain fund prospectuses.
In August 2014, a customer seeking to view an online prospectus contacted the firm, causing staff to learn that the prospectus link was not present, according to the settlement. During a nine-month period, the firm failed to deliver close to 2.1 million prospectuses to online customers via its “view prospectus” link.
Morgan Stanley Smith Barney was first created during some of the darkest days of the mortgage crisis in 2009 by combining the wealth management group of Morgan Stanley & Co. and the Smith Barney division of Citigroup Global Markets. In 2013, Morgan Stanley purchased Citigroup's remaining interest in the joint venture.
From November 2013 to December 2014, due to a coding error,
Morgan Stanley also failed to generate and send about 23,500 investment objective change letters to clients, according to Finra. According to industry rules, broker-dealers are required to confirm in writing to customers any changes made to a client's investment objectives within 30 days of such a change.
Also, from June 2012 to June 2016, the firm failed to send at least 4,000 letters to customers confirming changes in their investment objectives within 30 days of the change.
“The settlement recognized Morgan Stanley's extraordinary cooperation in identifying and quickly resolving the prospectus issue, and further recognized that prospectuses were available elsewhere on MS Online, and client profile information continued to be reflected on account statements,” said Morgan Stanley spokeswoman Christine Jockle.
(See:
Independent broker-dealers boost tech spending
