NEW YORK (Reuters) – A U.S. regulator on Thursday fined Morgan Stanley $1.6 million for failing to timely cancel or close out 239 failed inter-dealer municipal securities transactions, and take prompt steps to obtain control of hundreds of municipal securities that had been due for months.
The Financial Industry Regulatory Authority said the case was its first disciplinary action for violating close-out requirements under a rule imposed by the Municipal Securities Rulemaking Board.
Morgan Stanley did not admit or deny wrongdoing in agreeing to settle. The alleged improper conduct occurred between 2016 and August 2021.
“Morgan Stanley has enhanced its policies and procedures for closing out municipal short positions and is pleased to resolve this matter,” a spokesperson for the bank said in an emailed statement.
(Reporting by Jonathan Stempel in New York, Additional reporting by Niket Nishant in Bengaluru; Editing by Chizu Nomiyama)
