SEC
Whistleblower
Advocates

February 14, 2017

Morgan Stanley Smith Barney, LLC

Offering Fraud

SANCTION AMOUNT: $8,000,000

Defendants: Morgan Stanley Smith Barney, LLC

Respondent Morgan Stanley did not adequately implement its policies and procedures to ensure that advisory clients understood the risks involved with purchasing inverse ETFs. These investments were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy. Morgan Stanley recommended them, including for retirement accounts, but did not ensure their suitability through adequate disclosure, monitoring, etc.

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