The NASD said Thursday it has fined Morgan Stanley $2.2 million for late reporting that impeded several investigations by the brokerage regulator.
The NASD also suspended the investment bank and brokerage from registering new brokers for one week. The fine and censure resulted from more than 1,800 late disclosures about its brokers on items including customer complaints and disciplinary actions by regulators.
The federal regulator, which also charged Morgan Stanley for supervisory failures relating to the late filings, said an investigation of similar violations at other firms is ongoing.
“We began to implement a program of corrective action prior to finalizing this agreement and are moving quickly to conclude that process,” said Morgan Stanley spokeswoman Andrea Slattery.
Under the agreement, Morgan Stanley must also hire an independent consultant to review the firm’s supervisory systems and procedures for reporting.
The late filings also may have hampered investors’ ability to do broker background checks on the NASD’s public disclosure program, BrokerCheck, the regulator said.
“Every firm has a fundamental obligation to accurately and promptly file information about its brokers that NASD, other regulators and -- most importantly -- the investing public rely on to learn of potential misconduct,” said NASD Vice Chairman Mary Schapiro in a release.
Brokerages in general must update the NASD’s records within 30 days for regulatory actions against a broker, customer complaints and settlements involving a broker and criminal charges and convictions.
But from January 2002 to March 2004 Morgan Stanley’s updates were filed from one to several hundred days late and about 52 percent of all late filings were more than 90 days late, the NASD said.
“Those obligations cannot be ignored and negligence on the scale demonstrated in this case merits particularly strong sanctions,” Schapiro said.
Morgan Stanley agreed to the sanctions while neither admitting nor denying the allegations, the NASD said.
