From October 2001, through Dec. 2004, Morgan Stanley‘s automated trading system failed to provide best execution to more than 1.2 million executions valued at approximately $8 billion, said the US Securities and Exchange Commission in announcing its settlement with the investment bank. According to the agreement with the SEC, Morgan Stanley will pay $7,957,200 in disgorgement and penalties to settle the commission’s charges. And all of Morgan Stanley’s revenue from its undisclosed mark- ups and mark-downs will be distributed back to the injured investors through a distribution plan.
„By recklessly programming its order execution system to receive amounts that should have gone to retail customers, Morgan Stanley violated its duty of best execution and defrauded its customers,” said Linda Chatman Thomsen, director of the commission ‘s Division of Enforcement. „The duty to provide best execution is a fundamental duty of a broker-dealer. Broker-dealers must be diligent in their efforts to seek the most favorable terms for their customers’ orders,” he added. (people.com.cn)
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