Morgan Stanley drops on report of U.S. probes into wealth unit

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(Bloomberg) –Morgan Stanley shares slid as a lot as 6.5% after a report {that a} cadre of U.S. regulators are scrutinizing the agency’s efforts to stop potential cash laundering by rich shoppers.

The Securities and Trade Fee, the Workplace of the Comptroller of the Forex and different Treasury Division places of work are digging into whether or not the New York-based financial institution has accomplished sufficient to analyze the identities of dangerous shoppers, the Wall Road Journal wrote, citing unidentified folks aware of the matter. The Federal Reserve was already identified to be wanting into these controls final 12 months.

The SEC and the Treasury’s Monetary Crimes Enforcement Community have sought info on sure shoppers exterior the U.S. who’ve raised pink flags and the financial institution’s insurance policies to handle it. Particularly, the SEC pressed Morgan Stanley’s unit serving prosperous folks about why it did enterprise with some who had been minimize off by E*Commerce, the digital-trading platform the corporate acquired.

The inventory was down 5.5% to $86.61 at 2:45 p.m. in New York. A Morgan Stanley spokesperson declined to remark.

The financial institution has instructed regulators it is bettering controls and procedures and met with Federal Reserve officers to allay considerations final 12 months. The wealth enterprise has grown into the agency’s greatest unit, and has expanded lately after acquisitions.

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