The SEC alleged that MSSB willfully violated Section 206(2) and 206 (4) of the Advisers Act, which prohibits investment advisers from engaging in any business activities or practices that deceptive, fraudulent, or manipulative.
Rule 206(4)-7, which requires investment advisers to adopt and implement reasonable policies and procedures to prevent violations of the Advisers Act.
MSSB agreed to settle with the SEC without admitting or denying the allegations against it. The investment adviser and broker-dealer accepted the federal securities regulator’s Order imposing a $5 million penalty, a censure, and a cease-and-desist directive. The Order also required the creation of a Fair Fund to distribute the $5 million to clients harmed by MSSB.
