December 10, 2014

Morgan Stanley agreed to pay $4M to settle charges it violated the market access rule when it failed to uphold credit limits for a customer firm with a rogue trader who engaged in fraudulent trading of Apple stock.  An SEC investigation found that Morgan Stanley, which offers institutional customers direct market access through an electronic trading desk, did not have the risk management controls necessary to prevent the rogue trader from entering orders that exceeded pre-set trading thresholds.  The trader exploited the market access and, without Morgan Stanley’s knowledge, committed a fraud that eventually shuttered the firm where he worked.  SEC

Tagged in: Market Manipulation and Trading Violations, Regulatory Violations, Securities Fraud,