Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, August 7, 2007

Morgan Stanley Fined for Excessive Mark-ups in Bond Sales

FINRA fined Morgan Stanley DW Inc. (now known as Morgan Stanley & Co. Incorporated) $1.5 million and ordered the firm to pay more than $4.6 million in restitution for rule violations relating to the sale of corporate bonds to retail customers at excessive prices. The firm was cited for charging excessive mark-ups in more than 2,800 transactions and for having an inadequate supervisory system for monitoring the pricing of corporate fixed income securities sold to customers.  The firm's corporate bond trader, who was responsible for setting the excessive prices, Kenneth S. Carberry III, was fined $40,000 jointly and severally with the firm and suspended in all capacities for 15 business days.

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