Post by jannikki on Oct 1, 2006 17:58:04 GMT -4
Morgan Stanley; Regulators latest “Catch and Release” – September 6, 2006
David Patch
Morgan Stanley, founded in 1935, is considered one of Wall Street’s most elite institutions. According to the company profile, Morgan Stanley operates in four segments: Institutional Securities, Retail Brokerage, Asset Management, and Discover.
So how is it that the NASD fined Morgan Stanley this past week a paltry $2.9 Million for Widespread Violations of NASD Rules when Morgan Stanley has had 71 years to get it right?
This is not the first fine Morgan Stanley will receive nor will it be the last but this fine is indicative of the power, money, and corruption that makes up the existence of Wall Street Institutions.
According to the settlement filed by the NASD, Morgan Stanley settled on findings for “extensive violations dealing with reporting obligations, best execution, short sales, and a range of other NASD, Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) rules.”
How does this happen? How does one of the most elite become involved in extensive levels of violations when growing up as part of the industry itself?
To understand how, all you have to do is review the “catch and release” tactic taken by NASD officials.
According to the complaint divisions of Morgan Stanley;
Found that Morgan Stanley failed to implement effective supervisory systems and written supervisory procedures necessary to ensure compliance with federal securities laws, NASD rules and MSRB rules.
Failed to timely report or incorrectly reported thousands of transactions through the NASDAQ Market Center in NASDAQ National Market securities, OTC Equity securities and listed securities;
Executed thousands of short sales transactions without ensuring that the firm could deliver or arrange to borrow the securities by the settlement date;
Failed to execute hundreds of customer trades at the best available price, and will make nearly $5,000 in restitution payments to affected customers;
Failed to report or incorrectly reported thousands of transactions in corporate bonds; and
Created locked and crossed market conditions in hundreds of instances.
Failed to send, or failed to send in a timely manner, required documents to hundreds of customers in connection with municipal bond transactions;
Failed to report or incorrectly reported thousands of transactions in corporate and municipal bonds; and
Failed to enforce the firm's written supervisory procedures with respect to municipal bonds.
More disturbing is that in the press release by the NASD, NASD Executive Vice President Tom Gira stated that Morgan Stanly “undertook independent, internal reviews to determine the causes and extent of their trade reporting problems, provided their findings to NASD, and were otherwise highly cooperative with NASD's investigation. The firms' cooperation is reflected in the sanctions."
Bottom Line from this Vice President yahoo: One of Wall Street oldest and most elite firms executed thousands of illegal transactions over a span of 7 years, failed to set up or maintain any standards of compliance supervision, profited handsomely for their lack of controls and, because they cooperated, we let them go. They were a keeper but we let them go because they didn’t fight back.
What a gig. Lie, Cheat, and Steal until you get caught and then play nice to get the suckers [regulators] to leave you alone.
Not missed in this “catch and release’” tactic of securities regulators is that Morgan Stanley has also been involved in every major Wall Street scandal since 2000, been involved in the shredding of critical retention materials when under investigation, and recently has had the CEO, John Mack, questioned over insider trading allegations.
My question to NASD officials who signed up for this slap on the wrist would be; how much money did Morgan Stanley and their clients profit from these thousands or tens of thousands of regulatory breaches? How much damage was placed upon the investing public for such breaches of trust?
My guess is that this fine was simply a cost of doing business and represented the equivalent of a trade commission.
Think about this; if one of the oldest firms can not keep up with meeting regulatory standards, with all the profitability of the firm involved, what exactly do we think we are getting from these smaller firms operating on razor thin margins? If Morgan Stanley compliance operations “contained numerous types of reporting violations, and the scope of those violations indicated a failure to adequately address compliance needs of the firms,” how come it took so long to detect them? Where is Morgan Stanley’s commitment to value, integrity, and the safety of the investing public?
These violations ranged in time from 1999 to 2006 yet the laws Morgan Stanley failed to comply with are far older than 1999 laws. This would imply these “thousands of violations” are far more prevalent than the figures posted.
I am not sure about you but this “catch and release” tactic of securities regulators is getting old. I am looking for a good old fashioned life sentence to straighten these criminals out and the best place to start is at the top. It is time Wall Street’s finest executives are held personally responsible for the actions of these firms. If these regulators can’t see past this scam, it is time to bring more qualified individuals on board.
www.investigatethesec.com/20060908.htm
David Patch
Morgan Stanley, founded in 1935, is considered one of Wall Street’s most elite institutions. According to the company profile, Morgan Stanley operates in four segments: Institutional Securities, Retail Brokerage, Asset Management, and Discover.
So how is it that the NASD fined Morgan Stanley this past week a paltry $2.9 Million for Widespread Violations of NASD Rules when Morgan Stanley has had 71 years to get it right?
This is not the first fine Morgan Stanley will receive nor will it be the last but this fine is indicative of the power, money, and corruption that makes up the existence of Wall Street Institutions.
According to the settlement filed by the NASD, Morgan Stanley settled on findings for “extensive violations dealing with reporting obligations, best execution, short sales, and a range of other NASD, Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) rules.”
How does this happen? How does one of the most elite become involved in extensive levels of violations when growing up as part of the industry itself?
To understand how, all you have to do is review the “catch and release” tactic taken by NASD officials.
According to the complaint divisions of Morgan Stanley;
Found that Morgan Stanley failed to implement effective supervisory systems and written supervisory procedures necessary to ensure compliance with federal securities laws, NASD rules and MSRB rules.
Failed to timely report or incorrectly reported thousands of transactions through the NASDAQ Market Center in NASDAQ National Market securities, OTC Equity securities and listed securities;
Executed thousands of short sales transactions without ensuring that the firm could deliver or arrange to borrow the securities by the settlement date;
Failed to execute hundreds of customer trades at the best available price, and will make nearly $5,000 in restitution payments to affected customers;
Failed to report or incorrectly reported thousands of transactions in corporate bonds; and
Created locked and crossed market conditions in hundreds of instances.
Failed to send, or failed to send in a timely manner, required documents to hundreds of customers in connection with municipal bond transactions;
Failed to report or incorrectly reported thousands of transactions in corporate and municipal bonds; and
Failed to enforce the firm's written supervisory procedures with respect to municipal bonds.
More disturbing is that in the press release by the NASD, NASD Executive Vice President Tom Gira stated that Morgan Stanly “undertook independent, internal reviews to determine the causes and extent of their trade reporting problems, provided their findings to NASD, and were otherwise highly cooperative with NASD's investigation. The firms' cooperation is reflected in the sanctions."
Bottom Line from this Vice President yahoo: One of Wall Street oldest and most elite firms executed thousands of illegal transactions over a span of 7 years, failed to set up or maintain any standards of compliance supervision, profited handsomely for their lack of controls and, because they cooperated, we let them go. They were a keeper but we let them go because they didn’t fight back.
What a gig. Lie, Cheat, and Steal until you get caught and then play nice to get the suckers [regulators] to leave you alone.
Not missed in this “catch and release’” tactic of securities regulators is that Morgan Stanley has also been involved in every major Wall Street scandal since 2000, been involved in the shredding of critical retention materials when under investigation, and recently has had the CEO, John Mack, questioned over insider trading allegations.
My question to NASD officials who signed up for this slap on the wrist would be; how much money did Morgan Stanley and their clients profit from these thousands or tens of thousands of regulatory breaches? How much damage was placed upon the investing public for such breaches of trust?
My guess is that this fine was simply a cost of doing business and represented the equivalent of a trade commission.
Think about this; if one of the oldest firms can not keep up with meeting regulatory standards, with all the profitability of the firm involved, what exactly do we think we are getting from these smaller firms operating on razor thin margins? If Morgan Stanley compliance operations “contained numerous types of reporting violations, and the scope of those violations indicated a failure to adequately address compliance needs of the firms,” how come it took so long to detect them? Where is Morgan Stanley’s commitment to value, integrity, and the safety of the investing public?
These violations ranged in time from 1999 to 2006 yet the laws Morgan Stanley failed to comply with are far older than 1999 laws. This would imply these “thousands of violations” are far more prevalent than the figures posted.
I am not sure about you but this “catch and release” tactic of securities regulators is getting old. I am looking for a good old fashioned life sentence to straighten these criminals out and the best place to start is at the top. It is time Wall Street’s finest executives are held personally responsible for the actions of these firms. If these regulators can’t see past this scam, it is time to bring more qualified individuals on board.
www.investigatethesec.com/20060908.htm