(Bloomberg) — Morgan Stanley Smith Barney was fined $5 million by the Financial Industry Regulatory Authority for sales practices involving initial public offerings to individual investors, including that of Facebook Inc.
Morgan Stanleys brokerage, the worlds largest by number of advisers, didnt distinguish in its policy between a clients indication of interest in an IPO and a conditional request to buy, the industry-funded watchdog group said today in a statement. The New York-based firm also failed to monitor compliance with the policy,Finrasaid.
Morgan Stanley has used the size of its retail distribution, with more than $1.9 trillion in client assets, to boost its equity-underwriting business. It was the top issuer of global IPOs from February 2012 to May 2013, the time period the fine covers.
Customers must understand when they are entering a contract to buy shares in an IPO, Brad Bennett, Finras chief of enforcement, said in the statement. There must not be ambiguity regarding the customers obligations given the significant legal differences between an indication of interest and a conditional offer to buy.
Morgan Stanley neither admitted nor denied the charges. It did consent to the entry of Finras findings.
Morgan Stanley Wealth Management is committed to offering our clients participation in initial public offerings in accordance with applicableFinrarules and we have enhanced our practices on this point, Jim Wiggins, a bank spokesman, said in an e-mailed statement.
