The SEC announced today that Morgan Stanley agreed to pay a $13 million fine to resolve allegations that it overbilled investment advisory clients due to coding and other billing system errors. Morgan Stanley also violated the custody rule regarding annual surprise examinations.
The firm overcharged over 149,000 advisory clients because it failed to adopt and implement compliance policies and procedures reasonably designed to ensure that clients were billed appropriately in accordance with their advisory agreements, the SEC’s order stated. The commission also said Morgan Stanley failed to validate billing rates contained in the firm’s billing system against client contracts, fee billing histories, and other documentation.
Morgan Stanley acquired over $16 million in excessive fees because of the billing errors that happened between 2002 and 2016, according to the SEC. The firm has repaid this complete amount in addition to interest to injured clients.
Morgan Stanley failed to comply with the annual surprise custody examination requirements for two consecutive years when it failed to give its independent public accountant an accurate or complete list of client funds and securities for examination, according to the SEC. Morgan Stanley also failed to maintain and preserve client contracts.If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.