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Morgan Stanley Overbilled Clients, Violated Custody Rule - SEC
[Photo: by official-ly cool / Wikimedia Commons]
Morgan Stanley Smith Barney agreed to pay a $13 million penalty to settle SEC charges that it overbilled investment advisory clients and violated custody rule pertaining to annual surprise exams.
According To The SEC’s Order ….. from 2002 to 2016, Morgan Stanley overcharged some 149,000 advisory clients more than $16 million in excess fees due to the billing errors. The errors were not caught because 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 also failed to comply with the annual surprise custody examination requirements for 2 consecutive years when it did not provide its independent public accountant with an accurate or complete list of client funds and securities for examination. In addition, Morgan Stanley failed to maintain and preserve client contracts.
Reimbursements plus interest have been made to all affected clients.
