Home Banking & Finance Morgan Stanley to pay $13 million penalty for overcharging clients

Morgan Stanley to pay $13 million penalty for overcharging clients


Morgan Stanley, the global financial services firm with offices at 2000 Westchester Ave. in Purchase, will pay a $13 million penalty to settle charges that it overbilled more than 149,000 investment advisory clients due to coding and billing system errors, according to the Securities and Exchange Commission.

According to the SEC, Morgan Stanley received more than $16 million in excess fees during a 14-year period that ended in 2016. 

“Investors must be able to trust that their investment advisers have put appropriate safeguards in place to ensure accurate billing,” said Andrew M. Calamari, director of the SEC’s New York Regional Office. “The long-running deficiencies in those safeguards at Morgan Stanley resulted in 36 different types of billing errors that caused overcharges to customers,”

The firm also violated the custody rule pertaining to annual surprise examinations.

“The custody rule’s surprise examination requirement is designed to provide clients protection against assets being misappropriated or misused,” said Sanjay Wadhwa, senior associate director of the SEC’s New York office.  “Morgan Stanley failed in consecutive years to do what was required of it to give investment advisory accounts that important protection.”


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