Morgan Stanley shares drop after report on probe at its wealth division
Several federal regulators are investigating the bank over how it vets clients, Wall Street Journal reports
Bengaluru — Morgan Stanley’s wealth management arm was being probed by multiple regulators, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
The US Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC) and other treasury department offices were involved, the report said. The bank’s shares fell 4.8% in late afternoon trading to $87.17.
Regulators are assessing whether the bank has sufficiently investigated the identities of prospective clients, the sources of their wealth, and how it monitors their financial activity, the report said.
Some of the probes are also focusing on international clients, the report added.
Morgan Stanley declined to comment. Spokespeople for the SEC, the OCC and the treasury did not immediately respond to Reuters' requests for comment.
Morgan Stanley’s wealth management unit caters to high net worth individuals and small to medium-sized businesses, providing them with brokerage, custody, investment advisory and financial planning services.
The wealth business generates steadier income compared with investment banking, which is closely tied to economic cycles. Revenues from wealth management have helped Morgan Stanley expand its market capitalisation beyond rival Goldman Sachs .
Morgan Stanley recently resolved a years-long investigation into its block trading practices. It also nominated former UK financial regulator Megan Butler to its board of directors.
Reuters