[{"@context":"https:\/\/schema.org\/","@type":"ScholarlyArticle","@id":"https:\/\/globaltradefunding.com\/news\/how-do-banks-use-your-money-morgan-stanley-fined-7-5m-for-mishandling-depositors-funds\/#ScholarlyArticle","mainEntityOfPage":"https:\/\/globaltradefunding.com\/news\/how-do-banks-use-your-money-morgan-stanley-fined-7-5m-for-mishandling-depositors-funds\/","headline":"How Do Banks Use Your Money? Morgan Stanley Fined $7.5M For Mishandling Depositors\u2019 Funds","name":"How Do Banks Use Your Money? Morgan Stanley Fined $7.5M For Mishandling Depositors\u2019 Funds","description":"Morgan Stanley\u00a0faces a $7.5 million fine from the Securities and Exchange Commission, the SEC announced Tuesday, for using illegal levels of customers\u2019 cash and securities in swap trading. From March 2013 to May 2015, the megabank used its affiliate, Morgan Stanley Equity Financing Ltd., to serve as a client to its U.S. securities brokerage, the SEC said. In doing so,","datePublished":"2016-12-20","dateModified":"2018-03-30","author":{"@type":"Person","@id":"https:\/\/globaltradefunding.com\/news\/author\/syndicated\/#Person","name":"Syndicated","url":"https:\/\/globaltradefunding.com\/news\/author\/syndicated\/","identifier":3,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/899362aa862832b75c0d0a9a7a5a4289460381a95b120e6b6b253507647f9f87?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/899362aa862832b75c0d0a9a7a5a4289460381a95b120e6b6b253507647f9f87?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Global Trade Funding","logo":{"@type":"ImageObject","@id":"https:\/\/globaltradefunding.com\/files\/wp-content\/uploads\/Global-Trade-Funding-Text-Logo-220x60.png","url":"https:\/\/globaltradefunding.com\/files\/wp-content\/uploads\/Global-Trade-Funding-Text-Logo-220x60.png","width":600,"height":60}},"url":"https:\/\/globaltradefunding.com\/news\/how-do-banks-use-your-money-morgan-stanley-fined-7-5m-for-mishandling-depositors-funds\/","about":["Banking And Finance","Europe","Government","Industry","International Trade","North America","Politics","Regions"],"wordCount":366,"articleBody":"Morgan Stanley\u00a0faces a $7.5 million fine from the Securities and Exchange Commission, the SEC announced Tuesday, for using illegal levels of customers\u2019 cash and securities in swap trading.From March 2013 to May 2015, the megabank used its affiliate, Morgan Stanley Equity Financing Ltd., to serve as a client to its U.S. securities brokerage, the SEC said. In doing so, the affiliate could use funds from the brokerage, or broker-dealer, to finance its trades. The only problem: The broker-dealer\u2019s customer deposit reserves are required to be maintained at a certain level, in case customers want to pull out their money \u2014 in, say, the case of bank failure \u2014 and Morgan Stanley\u2019s maneuver depleted the pool of readily available customer money \u201cby tens to hundreds of millions of dollars per day,\u201d the regulator found.Morgan Stanley violated the SEC\u2019s nearly half-century-old Customer Protection Rule, which \u201cestablishes crucial safeguards for investors\u201d by ensuring their money is kept safe by broker-dealers, Michael Osnato, head of the Complex Financial Instruments Unit of the agency\u2019s Enforcement Division, said in the SEC news release. The rule, according to the SEC\u2019s site, states\u00a0a brokerage \u201cmay not use customer property as a source of working capital for its operations\u201d \u2014 in short, exactly what Morgan Stanley did.\u201cComplex trading schemes designed to artificially reduce the amount a broker-dealer must maintain in its customer reserve account run contrary to these basic obligations,\u201d Osnato said.Morgan Stanley is not the first to circumvent the rule, and its $7.5 million fine pales in comparison to that of Bank of America\u2019s Merril Lynch brokerage unit, which had to cough up $415 million in June after it put $5 billion to $58 billion worth of customers\u2019 assets at risk over a span of six years.The announcement of Merrill Lynch\u2019s settlement coincided with the SEC\u2019s unveiling of a new initiative to combat \u201chistorical or ongoing violations\u201d of the rule,\u00a0an SEC news release\u00a0said, calling for whistleblowers within broker-dealers to flag illegal behavior. SEC Enforcement Director Andrew Ceresney said in a conference call the move likely pleased investors, as Bank of America\u2019s trades ultimately gave its affiliate \u201cinterest-free loans of customer money,\u201d Wall Street Journal\u00a0reported."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"News","item":"https:\/\/globaltradefunding.com\/news\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"How Do Banks Use Your Money? Morgan Stanley Fined $7.5M For Mishandling Depositors\u2019 Funds","item":"https:\/\/globaltradefunding.com\/news\/how-do-banks-use-your-money-morgan-stanley-fined-7-5m-for-mishandling-depositors-funds\/#breadcrumbitem"}]}]