Morgan Stanley fined Again

Last Month came the news that Morgan Stanley DW Inc. (MSDW) was fined $2.9 Million for stock market violations including the following violation.

Executed thousands of short sales transactions without ensuring that the firm could deliver or arrange to borrow the securities by the settlement date; - Link

Sounds like Naked Shorting to me, doesn't it?

The announcement was listed in NASD's October 'NASD NTM DISCIPLINARY ACTIONS'(PDF Document) Report.

Interestingly enough, Morgan Stanley was fined again according to the November Report.

Morgan Stanley DW Inc. (CRD #7556, Purchase, New York) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $500,000 (to be paid jointly to NASD, the American Stock Exchange and the New York Stock Exchange) and required to revise its written supervisory procedures regarding short interest reporting. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it utilized “z indicators“ in its Security Master File for securities traded on multiple exchanges, but the firm’s short interest reports short positions omitted securities labeled with the “z indicator.“ The findings stated that the firm failed to report its short interest positions in preferred and affiliates’ securities. The findings also stated that the firm failed to reasonably and properly supervise its process for reporting short interest to NASD, in that it failed to detect inaccuracies associated with its short interest reports and failed to have an adequate system of follow up and review for compliance with self-regulatory organization rules with respect to short interest reporting. The findings also included that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and NASD rules concerning short interest reporting. (NASD Case #20050024147-01) - November Report (PDF Document)

Those are some pretty hefty fines for a market that is not supposed to have problems with shorting stocks.

NASD Fines Morgan Stanley Firms $2.9 Million for Widespread Violations of NASD Rules
- FFI 26 October 2006