Morgan Stanley fined $500,000 for securities violations

November 8th, 2006

New York, NY - Morgan Stanley was fined $500,000 by the New York Stock Exchange and censured for failing to report short interest positions in hundreds of securities for as long as 20 years.

Morgan Stanley was fined $500,000 by the New York Stock Exchange and censured for failing to report short interest positions in hundreds of securities for as long as 20 years.

Morgan Stanley failed to report to the NYSE positions in preferred securities and affiliates' equity securities for an unknown but "significant" number of years, and other equity securities since 2004, the regulator said. They also failed to adequately supervise its process for reporting short positions

The firm also failed to report similar positions to the American Stock Exchange, and since 1986 failed to report some positions in equity securities to the NASD, the NYSE said.

A short sale is a bet that a security's price will fall. An investor borrows a security and sells it, hoping to buy it back later at a lower price to replenish the lender.

Morgan Stanley agreed to the fine and censure without admitting wrongdoing. Spokeswoman Jeanmarie McFadden declined to comment. The fine will be divided equally among the NYSE, the Amex and the NASD.