Securities Law Prof Blog

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

Wednesday, July 13, 2011

Former Morgan Trader Sanctioned for Fictitious Swap Orders

The SEC recently settled charges against Jennifer Kim, a former trader at Morgan Stanley & Co. assigned to the swaps desk.  The SEC alleged that from October through December 2009 Kim and her supervisor entered at least 32 fictitious swap orders for the purpose of concealing from risk managers the extent of losses resulting from their proprietary trading.  The sanctions were a cease-and-desist order from committing violations of section 13(b)(5) and an industry bar, with the right to re-apply after 3 years.  What is interesting is that Commissioner Aguilar dissented because, in his view, the settlement should have included charges of violating the antifraud provisions.  In re Jennifer Kim; Aguilar dissent

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