For failing to preserve records, Morgan Stanley is paying $15 million to the SEC and a number of other regulators under an agreement reached with the SEC’s Division of Enforcement. Although any such settlement requires approval of the Commission, and Morgan Stanley is still in settlement discussions with the NASD. If you recall, last year Morgan Stanley ended up paying $1.57 billion resulting from a lawsuit in which much of the attention was devoted not merely to its inability to produce documents, but also because the judge concluded that Morgan Stanley’s conduct was knowing, in bad faith and deliberate.
The $15 million current fine, the highest ever imposed for a firm’s inability to retain and produce records, may have been the result of the SEC’s belief that an agreement relating to document retention previously agreed upon, was not being complied with.