Morgan Stanley agrees to $13 million fine and restitution for supervisory lapses of UIT trading
FINRA ordered Morgan Stanley to pay $13 million in fines and restitution to clients for failing to properly supervise trades that increased charges and fees to customers of certain investment funds. FINRA said that Morgan Stanley provided insufficient guidance to its staff on how to detect unsuitable short-term trades of unit investment trusts, or UITs.
From January 2012 through June 2015, Morgan Stanley representatives advised thousands of customers to sell their UITs before their maturity date and roll their investment into a new trust.
By selling their UIT position before the maturity date and then rolling the funds over into a new trust, clients may pay higher sale charges over time.
UITs are a type of investment fund that offers units in a portfolio of securities. At the end of the trust’s life, investors can receive cash equal to the net asset value of the units or they can roll the current value of their investments into another trust.
Finra fined Morgan Stanley $3.25 million, while the bank will have to pay about $9.78 million in restitution to more than 3,000 customers.
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