Morgan Stanley nears deal to pay as much as $300M to settle stock sales probe: report
Morgan Stanley is close to an agreement to pay $200 million to $300 million to settle a US investigation into its employees’ handling of big stock sales, Bloomberg News reported on Thursday.
The penalty, expected to be announced in the coming days, will be divided between the Justice Department and the Securities and Exchange Commission, the report said, citing people with knowledge of the situation.
Reuters could not immediately verify the size of the potential fine. The probe relates to so-called “block trades” banks execute on behalf of clients.
Representatives for the Manhattan US attorney’s office, Morgan Stanley and the SEC declined to comment.
Authorities in recent weeks have discussed with the bank resolving the criminal investigation with an agreement to hold off prosecution in exchange for a penalty, a source briefed on the matter told Reuters.
At least one individual was facing repercussions as part of the probe, the source added, but authorities were considering potentially minor charges or sanctions.
Any settlement would finally remove what has become an overhang for Morgan Stanley for the last few years.
Former CEO James Gorman had assured investors that he would stay on at the bank to help his successor Ted Pick deal with the block trading probe and “fix up the loose ends.”
The bank had disclosed in May that it was in discussions with the SEC and the US Attorney’s Office for the Southern District of New York to resolve the probe.
Broker-dealers frequently buy and sell blocks of shares, either on behalf of clients or as part of a hedging strategy, which are large enough to move a company’s share price.
Block trading tends to increase during times of volatility as institutional investors re-balance their portfolios.
