Morgan Stanley

New York, NY: (Aug-07-07) The Financial Industry Regulatory Authority (FINRA) brought charges against Morgan Stanley, alleging that the firm overcharged customers on corporate bond sales in 2001. The suit stated that Morgan allegedly charged excessive markups in more than 2,800 transactions. The newly formed regulator also cited the firm for having an inadequate supervisory system for monitoring the pricing of corporate fixed income securities. FINRA placed the responsibility for the excessive markups on corporate bond trader, Kenneth Carberry III. The regulator fined him and the firm an additional $40,000 and suspended Carberry for 15 days. FINRA claimed that that the bond overcharges at Morgan took place during a five-month period during 2001. The firm allegedly charged markups ranging from 5.88% to 17.86% on 2,807 sale transactions of Kemper Lumbermans Mutual Casualty Surplus Notes in the 9.15% and 8.30% series, with a face value totaling over $59 million.

Operating out of Morgan's New York City office, Carrberry set the offering price of those trades, to which Morgan added sales commissions. FINRA claimed that the pricing method used by Carrberry resulted in excessive prices for customers. Though Carrberry and Morgan did not admit or deny any guilt, it consented to FINRA's charges. In a settlement reached, Morgan Stanley agreed to pay a $1.5 million fine as well as pay more than $4.5 million in restitution for overcharging customers on corporate bond sales in 2001. [CCH WALL STREET: CORPORATE BONDS]

Legal Help

If you have a similar problem and would like to be contacted by a lawyer at no cost or obligation, please click the link below.
Published on Aug-8-07