In a seismic legal development, financial giant Morgan Stanley is set to pay a staggering $249 million, drawing curtains on a blockbuster lawsuit involving alleged false statements and information misuse related to block trades. This revelation, announced jointly by New York criminal prosecutors and securities regulators on Friday, uncovers a web of deceit that allowed certain individuals to exploit market movements to their advantage.
Morgan Stanley To Pay $249M In Block Trading Probe : Deceptive Tactics Unveiled
Under a nonprosecution agreement, Morgan Stanley will be shelling out a substantial sum comprising fines, penalties, interest, and disgorgement. This resolution comes on the heels of the bank implementing corrective measures to thwart what Manhattan U.S. Attorney Damian Williams described as “serious” misconduct within securities markets.
Pawan Passi at the Center
The spotlight of this enthralling saga falls on Pawan Passi, the supervisor of Morgan Stanley’s block trades business. According to Williams, Passi, through deceptive means, lured block sellers into a false sense of confidentiality, fully aware that these sellers would betray the trust by sharing privileged information for personal gains.
Morgan Stanley To Pay $249M In Block Trading Probe : Deferred Prosecution for Passi
In a surprising twist, Pawan Passi has entered into a deferred prosecution agreement and is slated to make a courtroom appearance in Manhattan federal court this Friday. The case against him unravels a tale of intrigue and betrayal within the high-stakes world of block trading.
Unveiling Nonpublic Information
From June 2018 to August 2021, Passi, along with a subordinate on Morgan Stanley’s equity syndicate desk, allegedly disclosed nonpublic, potentially market-moving information regarding imminent block trades. This disclosure went against sellers’ explicit confidentiality requests and violated Morgan Stanley’s internal policies, as highlighted by the U.S. Securities and Exchange Commission in a press release.
Block Trades – The Backdrop
Block trades, typically involving large-scale transactions of an issuer’s stock, take place discreetly outside public markets. The alleged misconduct spans over three years, showcasing a pattern of deception that has rocked the core of one of the financial industry’s titans.
