Morgan Stanley to pay $8.8m over SEC ‘parking’ claims

by MPA23 Dec 2015
Morgan Stanley will pay $8.8 million to resolve U.S. Securities and Exchange Commission allegations that a portfolio manager used prearranged trades to favor some clients over others.
 
The former Morgan Stanley portfolio manager, Sheila Huang, and Societe Generale SA mortgage-bond trader, Yimin Ge, who assisted in the scheme, agreed to be barred from the securities industry and pay penalties as part of the settlement of the SEC’s “parking” allegations, the agency said in a statement Tuesday. Morgan Stanley agreed to settle without admitting or denying wrongdoing, and will pay an $8 million fine and return $857,534 to client accounts affected by the trading, the regulator said. Societe Generale’s broker-dealer unit, which also didn’t admit or deny the findings, agreed to pay an $800,000 penalty, and disgorgement and interest of $211,093.
 
“Instead of playing by the rules, Huang engaged in prearranged trading schemes that benefited some clients while harming others,” said Marshall S. Sprung, co-chief of the SEC enforcement division’s asset management unit. “Morgan Stanley failed to uncover Huang’s misconduct due to its lack of supervisory oversight and failure to implement policies specifically addressing prearranged trades.”
 
The SEC has found wide-ranging misconduct in the opaque world of bond trading. Wall Street’s main regulator has uncovered extensive bond parking, where traders sell debt to accomplices with an agreement that they’ll buy them back at a higher price at a later date.
 
Attorneys for SG Americas, Societe Generale’s broker- dealer, Huang and Ge declined to comment. A lawyer representing Morgan Stanley didn’t immediately respond to a request for comment.
 

(Bloomberg)

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