Morgan Stanley Anticipates Penalty Amid DOJ and SEC Block Trading Probe


  • The upcoming penalty division between the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) is expected to be announced soon, stated by individuals knowledgeable of the matter.
  • The Manhattan U.S. attorney’s office representative, Morgan Stanley, and SEC withheld their comments on the issue.
  • A penalized individual from the probe was reportedly facing repercussions notwithstanding authorities mulling over possibly flippant charges/sanctions.
  • The resolution of this ongoing issue will ultimately lift the longstanding burden off Morgan Stanley.
  • Ex-CEO James Gorman affirmed to remain at the bank to assist potential successor Ted Pick in dealing with the block trading investigation and closing the loopholes.
  • Morgan Stanley officially confirmed that it was in dialogue with the SEC and the U.S. attorney’s office for the Southern District of New York seeking a resolution to this probe.
  • Broker-dealers often engage in buying and selling of share blocks on behalf of clients or as a part of a hedging strategy, causing potential shifts in a company’s share price.
  • Block trading frequently amplifies amid volatility times as institutional investors re-adjust their portfolios.

Unveiling of Expected Penalty

The impending penalty to be divided between the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) is anticipated to be declared within the next few days, according to sources aware of the situation.

Comments Withheld

No comments have been made available from the representatives of the Manhattan U.S. attorney’s office, Morgan Stanley, and the SEC regarding this matter.

Repercussions for Penalized Individual

A source revealed that at least one individual, implicated in the probe, could potentially face repercussions. However, the authorities are contemplating minor charges or sanctions.

Resolution of Overhanging Probe

An likely settlement would eventually lift the long-existing overhang that Morgan Stanley has been under for several years. Around May, the bank confirmed discussing with the SEC and the United States Attorney’s Office for the Southern District of New York to resolve the probe.

Role of Past CEO and Block Trading

James Gorman, ex-Morgan Stanley CEO, reassured stakeholders of his planned continuance in the bank to support his successor Ted Pick in confronting the block trading probe and tying up loose ends. Furthermore, broker-dealers frequently affect a company’s share price by purchasing and selling large blocks of shares, representing either their clients or as part of a hedging plan.

Influence of Volatility

Times of volatility often witness an increase in block trading as institutional investors readjust their portfolios.

This financial development can potentially impact forex trading. Brokers and investors who deal in U.S securities assets should keenly observe how this situation unfolds to plan future investment decisions.

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