Morgan Stanley fined for bond sale overcharges
Thu Aug 2, 2007 11:03AM EDT
NEW YORK, Aug 2 (Reuters) - U.S. securities regulators on Thursday assessed a $6.15 million penalty against Morgan Stanley (MS.N: Quote, Profile, Research) to resolve charges it overcharged retail brokerage customers on $59 million in corporate bond sales.
The newly created Financial Industry Regulatory Authority
(FINRA) assessed a $1.5 million fine and ordered Morgan Stanley to reimburse $4.65 million to customers.
FINRA said Morgan Stanley's retail brokerage unit in 2001 overcharged customers on 2,807 transactions involving notes issued by Kemper Lumbermens Mutual Casualty Co., including markups ranging from 5.88 percent to 17.86 percent. The regulator also fined trader Kenneth Carberry $40,000 and suspended him 15 business days. It said he set the excessive markups.
Morgan Stanley and Carberry did not admit wrongdoing. Christy Pollak, a company spokeswoman, said the Wall Street firm has adopted new policies for supervision and control.
The enforcement case is the first since FINRA was created Monday from the merger of the National Association of Securities Dealers and the New York Stock Exchange's member regulation, enforcement and arbitration operations.
