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    Morgan Stanley Pays $7.5Mln Fine for Secret Trades With Client Cash - Regulator

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    The Wall Street investment firm Morgan Stanley violated the US Securities and Exchange Commission (SEC) customer protection rule that is intended to safeguard customers’ cash and securities should the broker-dealer fail, according to media reports.

    WASHINGTON (Sputnik) — The Wall Street investment firm Morgan Stanley has agreed to pay $7.5 million to settle charges that it used its customers’ cash to cover unrelated security trades, the US Securities and Exchange Commission (SEC) announced in a press release on Tuesday.

    In doing so, Morgan Stanley violated SEC’s customer protection rule that is intended to safeguard customers’ cash and securities should the broker-dealer fail, the release explained.

    "The customer protection rule establishes crucial safeguards for investors to ensure that their cash and securities are secure when held by a broker-dealer," SEC Enforcement Division’s Complex Financial Instruments Unit chief Michael Osnato said in the release.

    Osnato also noted that Morgan Stanley used a complex trading scheme involving an affiliated company to artificially reduce the amount needed to set aside in customer reserve accounts.

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    US Securities and Exchange Commission (SEC), Morgan Stanley, United States
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