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 Eccleston Law 

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.

 

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

Tags: eccleston, eccleston law, sec

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