Morgan Stanley to pay $249M over block trade probes
Morgan Stanley agreed to pay $249 million to the Justice Department and Securities and Exchange Commission to end a years-long US investigation into block trading that rattled the industry.
A non-prosecution agreement with federal prosecutors in Manhattan allows the bank to avoid criminal charges. Its former senior-ranking equities executive Pawan Passi, who was placed on leave and later left the bank after the probe intensified, will enter into a deferred-prosecution agreement over his handling of confidential information, according to the government.
As part of the total, Morgan Stanley will pay about $113 million to the SEC, the regulator announced Friday.
“Morgan Stanley, through the supervisor of its block trades business, Pawan Passi, deceived customers by promising confidentiality knowing that they would turn around and share that information with others to use to trade,” Manhattan US Attorney Damian Williams said in a statement Friday.
Morgan Stanley said in a statement that it is “confident in the enhancements we have made to our controls around block trading, including strengthening our policies, procedures, training and surveillance.”
It said that “the core of this matter is the misconduct of two employees who violated the firm’s policies, procedures and our core values, as outlined in the settlement documents.”
The Justice Department announced earlier that the bank would pay $153 million for its agreement with the DOJ, but offsets between the two government bodies bring that down to about $136 million, for a total of $249 million.
The investigation into highly sensitive block trades — in which banks typically help clients buy or sell chunks of stock large enough to move prices — has focused in part on
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