News that multiple US regulators have opened investigations into Morgan Stanley’s wealth-management business to assess how the Wall Street firm handles and oversees potentially risky clients came as a big shock when it broke on Thursday this week. Maybe it shouldn’t have.
According to reporting from The Wall Street Journal, officials at the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency and the US Treasury are asking if the bank does enough to scrutinise wealthy clients and stymie potential money laundering. The trio join the US Federal Reserve, which was already known to be investigating the wealth-management unit’s internal controls.
Two of the agencies involved, the SEC and the Treasury’s Crimes Enforcement Network, have sought information about specific non-US-based clients who have raised red flags and how the bank is addressing the situation, the Journal said.
The SEC is also alleged to have asked the bank why it continued doing business with clients whose accounts were previously discontinued by E*Trade, the digital-trading platform acquired by Morgan Stanley in 2020 for $13 billion.
And the regulator is reported to have asked how the bank vets previous and existing clients, allegedly including a billionaire with Russian links who is under UK sanctions.
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