Judge Backs Morgan Stanley Over In-House Trading Rule

Law360, New York (May 25, 2011, 4:26 PM EDT) -- A California federal judge on Monday threw out a class action challenging Morgan Stanley Smith Barney LLC's requirement that employees keep their stock accounts in-house, finding the corporate policy legal under federal law.

U.S. District Judge Dale S. Fischer said a California state labor law that purportedly bars Morgan Stanley's in-house trading policy is preempted by federal law aimed at stopping insider trading.

“Allowing state law to regulate how securities firms supervise and restrict insider trading would create a patchwork of laws that would interfere with...
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