The Strategist

Morgan Stanley to pay $249M over likely disclosure of confidential information

01/15/2024 - 12:46

According to a press release from the regulator, American bank Morgan Stanley has agreed to pay over $249 million to resolve allegations of fraud and failure to provide "information barriers", states the US Securities and Exchange Commission (SEC).

Alex Proimos
Alex Proimos
The charges concern the exposure of private information regarding the so-called "block trading", that is, the selling of big blocks of stock.

SEC Chairman Gary Gensler, whose remarks are cited in the news release, stated, "The (stock) sellers entrusted Morgan Stanley with material nonpublic information about pending block trade transactions with the full expectation that the bank would keep it confidential."

However, as Gensler points out, the lending organization and Pavan Passi, the former head of its equity syndication unit, took advantage of the information for their own gain.

The SEC also fined Passi $250,000.