Inquiry Launched into Morgan Stanley’s Wealth Management Arm by Multiple Regulators
Overview
Investment bank Morgan Stanley’s wealth management arm is currently under investigation by multiple regulatory bodies, according to sources familiar with the matter. The U.S. Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), and various Treasury Department offices are participating in the inquiry. As a result of the news, Morgan Stanley’s shares experienced a 4.4% decline, falling to $87.71.
Scope of Wealth Management
Morgan Stanley’s wealth management unit primarily serves high net-worth individuals and small to medium-sized businesses, offering a wide range of services including brokerage, custody, investment advisory, and financial planning.
Market Resilience
This unit of Morgan Stanley, unlike its investment banking division, is relatively insulated from major market fluctuations. This resilience has contributed significantly to the higher valuation Morgan Stanley enjoys when compared to its main rival, Goldman Sachs.
Examining the Issues
The investigation is focused on key areas, particularly the thoroughness of the bank’s client screening processes, verification of client wealth sources, and the monitoring of client financial activity. Concerns extend beyond domestic clients and also encompass international clients.
Past Investigations
Morgan Stanley had recently resolved a long-standing investigation pertaining to its block trading practices. The bank’s response to the ongoing scrutiny remains uncertain as spokespeople from Morgan Stanley, the SEC, the OCC, and the Treasury have not yet commented publicly.
About the Authors
This article was reported by Niket Nishant in Bengaluru with additional contributions from Manya Saini and Pete Schroeder. The editing was done by Krishna Chandra Eluri.
