(Reuters) – Wall Street’s industry-funded watchdog said it had fined Morgan Stanley $2 million for violations of short-interest reporting and short-sale rules for more than six years.
Financial firms are meant to regularly report their short positions in customer and proprietary accounts.
The information is then made public by the Financial Industry Regulatory Authority (FINRA).
Morgan Stanley failed to “completely and accurately” report its short interest positions in certain securities involving billions of shares, FINRA said on Wednesday. (http://bit.ly/1IxJAac)
The bank also violated a rule requiring that firms aggregate their positions in a security to determine if they are long or short, the regulator said.
The aggregation cannot include security positions of non-broker-dealer affiliates, however, and Morgan Stanley did so for seven years, FINRA said, adding that the bank failed to implement a system that would prevent these violations.
A Morgan Stanley spokesman said the bank had co-operated fully with FINRA’s investigation, self-reported many of the issues raised in the settlement and has revised its short-interest reporting policies, procedures and internal controls.
Morgan Stanley neither admitted nor denied the charges, FINRA said.
(Reporting by Richa Naidu in Bengaluru; Editing by Savio D’Souza and Ted Kerr)
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