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SEC Alleges Fraud Against Morgan Stanley and Former Executive in Block Trading Business

Posted on February 21st, 2024 at 2:59 PM
SEC Alleges Fraud Against Morgan Stanley and Former Executive in Block Trading Business

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï 

As reported by the Wall Street Journal, the Securities and Exchange Commission (SEC) has charged Morgan Stanley & Co. LLC and its former head of equity syndicate desk, Pawan Passi, with a multi-year fraud involving the disclosure of confidential information related to block trades.

Block trades involve the private sale of large quantities of a company's stock outside the public markets. The SEC alleges that from June 2018 to August 2021, Passi and a subordinate on Morgan Stanley's equity syndicate desk disclosed non-public information about impending block trades to select buy-side investors, contrary to sellers' confidentiality requests and Morgan Stanley's policies.

The SEC ordered Morgan Stanley to pay approximately $138 million in disgorgement, $28 million in prejudgment interest, and an $83 million civil penalty. Passi is ordered to pay a $250,000 civil penalty and faces associational, penny stock, and supervisory bars.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

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