$19 Million Fine Imposed Upon Morgan Stanley for Failure to Deliver Prospectuses to Customers and For Other Supervisory Failures

Between June 1, 2003 and August 31, 2004, Morgan Stanley violated the law when it sold customers its registered offerings without delivering prospectuses to them. Prospectuses are important documents that discuss some of the risks associated with particular investments.

The New York Stock Exchange is settling its disciplinary action against Morgan Stanley with a censure and $19 million fine. Other "significant" failures for which the fine is being imposed include failing to supervise two employees who misappropriated $60 million from the firm and its customers. The NYSE commented that such "operational failures and supervisory lapses are a dangerous combination."

Customers who purchased the investments requiring a prospectus will be entitled to immediate rescission (cancellation) of those investments, per Morgan Stanley's agreement, according to the NYSE press release.

Source: NYSE News Release, September 22, 2004