Morgan Stanley division to pay $3.3m settlement to SEC

18 November 2011

A unit of Morgan Stanley is to pay $3.3 million to the Securities and Exchange Commission (SEC) over violations surrounding an advisory services fee arrangement.

According to an investigation by the SEC, Morgan Stanley Investment Management (MSIM) claimed that it contracted a subsidiary of AM Bank Group to provide it with advice while working with The Malaysia Fund.

The fund’s contract with the sub-adviser was renewed annually for over a decade at a cost of $1.8 million to investors.

However, the investigation found that AMB only provided two monthly reports, which were based on publicly available information not requested or used by MSIM.

Bruce Karpati, co-chief of the SEC Enforcement Division’s Asset Management Unit, said: “MSIM failed in its duty to provide the fund’s board members with the information they needed to fulfill their significant responsibility of reviewing and approving the sub-adviser’s contract.

“MSIM’s failure undermined the integrity of the board’s oversight process.”

Meanwhile, the SEC announced that the ex-chief executive officer and chairman of CSK Auto Corporation agreed to hand over $2.8 million in bonus payments and stock he received while the company was committing fraud.

By Jim Ottewill

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development