The Financial Industry Regulatory Authority (FINRA) of US has censured and fined Morgan Stanley $800,000 for failing to make public disclosures required by FINRA's rules governing research analyst conflicts of interest.
The firm also failed to comply with a key provision of the 2003 Research Analyst Settlement by failing to disclose the availability of independent research in customer account statements, said FINRA.
In addition to the censure and fine, Morgan Stanley is asked by FINRA to review a sample of its research reports and certify to FINRA that they comply with FINRA’s research analyst conflict-of-interest rules. These reviews and certifications must take place every six months for two years.
James Shorris, executive vice president and acting chief of enforcement at FINRA, said: “This case strikes at the heart of FINRA’s research disclosure requirements, which were written in response to scandals involving research analyst conflicts of interest. Here, thousands of Morgan Stanley research reports did not include accurate information about the firm’s relationships with the companies it covered, depriving potential investors of important information.”