Morgan Stanley Dismisses 2 Senior Workers
BALTIMORE (AP) _ Morgan Stanley said Thursday that two senior employees were dismissed last month from an assets management business unit, reportedly under investigation by the Securities and Exchange Commission.
Branch manager Harry Buzzered and broker Chris Glassman are no longer with the firm, spokeswoman Andrea Slattery said. She declined comment on the reasons for their departure or any possible investigation.
The Wall Street Journal reported Wednesday that the SEC is investigating mutual fund trading at a Morgan Stanley bureau in Baltimore, citing people familiar with the matter. The Journal said the investigation allegedly focused on market timing involving mutual funds of Glassman clients.
Market timing involves rapidly buying and selling shares of mutual funds, and its practice is generally prohibited by fund companies because it harms the interests of long-term fund owners.
New York-based Morgan Stanley already is under SEC investigation for its revenue sharing agreement with Alliance Capital Management. Last month, Alliance Capital said in its annual report that it had provided documents subpoenaed by the agency regarding dealings with Morgan Stanley.
In revenue sharing, a common practice in the securities industry, brokerage firms that sell mutual funds receive cash from fund companies or payments in the form of commissions on fund trades.
The SEC has been investigating a number of fund companies which it says failed to adequately disclose to investors their roles in the revenue-sharing deals and potential conflicts of interest arising from them.
In December, Alliance Capital agreed to pay the $600 million penalty to resolve regulators’ allegations of improper fund trading.
Morgan Stanley agreed in November to pay a $50 million civil fine and change its practices in a settlement with the SEC and the National Association of Securities Dealers for an alleged ``firm-wide failure″ to fully disclose potential conflicts of interest. Morgan Stanley also agreed last fall to pay a $2 million fine to settle the NASD’s allegations that it held prohibited sales contests to push its brokers to sell in-house mutual funds and certain annuities.