Washington, D.C. – Morgan Stanley Smith Barney LLC (MSSB) has settled charges with the U.S. Commodity Futures Trading Commission (CFTC) for multiple violations of CFTC regulations concerning the handling of customer funds, the agency announced on March 27, 2014. While no customer losses resulted from the infractions, MSSB will pay a $490,000 civil monetary penalty and is required to cease and desist from further violations.
The CFTC’s order details that on April 8, 2013, MSSB mistakenly transferred approximately $16 million from a customer secured funds account, creating a $9.27 million deficiency in its secured funds. The error was identified and rectified the following day. Following this incident, MSSB commissioned a review by KPMG LLP, which recommended policy and procedural changes that MSSB has since largely implemented.
The investigation also revealed that MSSB commingled customer segregated and firm funds within a customer segregated bank account for roughly six months in 2012. Furthermore, for approximately eight months in the same year, the firm failed to accurately calculate its segregated and secured funds daily. Although these inaccuracies did not result in MSSB falling below required funding levels, the firm was compelled to refile 120 daily statements to correct the errors.
Finally, the CFTC found that account statements for four of MSSB’s segregated accounts were incorrectly labeled as customer secured accounts for several months in 2012.
Allison Passman, David Terrell, Joseph J. Patrick, Ava Gould, Scott R. Williamson, and Rosemary Hollinger of the CFTC’s Division of Enforcement led the investigation. The Commission also acknowledged assistance from its Division of Swaps and Intermediary Oversight and the National Futures Association.
Source: CFTC.gov
Related Federal Cases
- Stanley Moghalu, Murder for Informing, MD 2011 · District of Columbia
- ATF Warns of Legal Policies: Linking to DOJ Sites at Your Own Risk · Illinois
- FDIC ComE-IN Panel No Defendant Found, Washington DC, Not Applicable · New York
- Letitia James, Environmental Law Violation, New York 2024 · New York
- Letitia James Sues Live Nation for Illegal Monopoly, New York NY, 2023 · District of Columbia
