Finra fines Morgan Stanley $325,000 over research errors

The regulator censured the firm for publishing research reports that included inaccurate historical stock ratings.

The Financial Industry Regulatory Authority Inc. has censured Morgan Stanley and fined the firm $325,000 for publishing research reports that included inaccurate historical stock ratings.

In its letter of acceptance, waiver and consent, Finra said that Morgan Stanley used a software program to generate price charts that appeared in its research disclosures. The firm revised the software on or around Aug. 30, 2019, to address new European Union regulatory requirements that required the disclosure of five years of information for a recommended security under certain circumstances.

The revised software contained a typographical error that caused the price charts in certain research reports to display stock ratings from five years prior to the report, but labeled those ratings, inaccurately, as being from three years prior to the report. The software error affected only the presentation of historical ratings within the price charts, Finra said.

A firm supervisory analyst identified an inaccurate historical stock rating in a price chart of a research report in January 2020 and escalated the issue. As a result of the price-chart software error, however, the firm published approximately 11,000 research reports between Aug. 30, 2019, and Feb. 28, 2020, that included price charts with inaccurate historical stock ratings.

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