Morgan Stanley Pays $7.5M For Customer Protection Offenses

Law360, New York (December 20, 2016, 4:26 PM EST) -- Morgan Stanley & Co. LLC agreed to pay $7.5 million Tuesday to settle allegations it violated the U.S. Securities and Exchange Commission’s Customer Protection Rule when using customer cash as collateral on loans used to finance hedging swap trades.

Morgan Stanley & Co., Morgan Stanley’s U.S. broker-dealer, agreed to the fine without admitting or denying SEC charges that it violated rules requiring firms to keep funds in a customer reserve account by using a complicated trading scheme to lower the cost of hedging swap trades with customers that improperly reduced the amount it held in the account. The deal came a...

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