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CFTC Fines Morgan Stanley for Records Failures

Joe Mont | September 15, 2014

The Commodity Futures Trading Commission has fined  Morgan Stanley Smith Barney $280,000 for improper supervision and records violations related to “know your customer” procedures. The firm also agreed to disgorge commissions it earned from the subject accounts in order to address its unlawful conduct.

According to the CFTC, Morgan Stanley failed to diligently supervise the opening and handling of accounts held in the name of a family of companies called SureInvestment. Purported to operate a hedge fund based in part in the British Virgin Islands it was deemed a “high risk jurisdiction” under Morgan Stanley’s compliance procedures.

The opening of these accounts was subject to special scrutiny pursuant to Morgan Stanley’s Enhanced Due Diligence and Customer Identification Program procedures. These procedures required personnel to be alert for any...

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