Reuters logo
UPDATE 1-Morgan Stanley to pay $5 mln to settle CFTC case
June 5, 2012 / 5:40 PM / 6 years ago

UPDATE 1-Morgan Stanley to pay $5 mln to settle CFTC case

* CFTC says Morgan Stanley made “fictitious sales” of EFRPs

* Improper off-exchange trades took place 2008-2009 -CFTC

* Morgan Stanley says pleased to settle charges

(Adds details of case, Morgan Stanley reaction)

By Alexandra Alper

WASHINGTON, June 5 (Reuters) - Morgan Stanley (MS.N) agreed to pay $5 million to settle charges brought by the Commodity Futures Trading Commission that it executed unlawful noncompetitive trades, the agency said on Tuesday.

The bank executed, processed and reported off-exchange futures trades to the Chicago Mercantile Exchange and Chicago Board of Trade as exchanges for related positions (EFRPs) over an 18-month period from 2008 to 2009, according to the CFTC.

The EFRPs constituted “fictitious sales” because the futures trades were executed noncompetitively and not in accordance with exchange rules, the CFTC said.

“The laws requiring that futures trades be executed on an exchange serve important price discovery and transparency principles,” said CFTC enforcement director David Meister.

“When a (broker) reports that it properly conducted an off-exchange futures trade as part of an EFRP, that report had better be accurate.”

    A spokeswoman for Morgan Stanley said that bank was pleased to settle the charges. “Morgan Stanley cooperated fully with exchange staff in the matter,” Mary Claire Delaney said in an email, noting that the order did not find any to customers.

    She also said the settlement relates to trades initiated by a single former salesperson.

    In the order, the CFTC said the bank “failed to supervise diligently its employees’ handling of the trades at issue.”

    (Reporting By Alexandra Alper, additional reporting by Karey Wutkowski; Editing by Jeffrey Benkoe and Phil Berlowitz)

    (( Keywords: MORGANSTANLEY CFTC/

    C Reuters 2012. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing, or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

    0 : 0
    • narrow-browser-and-phone
    • medium-browser-and-portrait-tablet
    • landscape-tablet
    • medium-wide-browser
    • wide-browser-and-larger
    • medium-browser-and-landscape-tablet
    • medium-wide-browser-and-larger
    • above-phone
    • portrait-tablet-and-above
    • above-portrait-tablet
    • landscape-tablet-and-above
    • landscape-tablet-and-medium-wide-browser
    • portrait-tablet-and-below
    • landscape-tablet-and-below