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Updated on November 27, 2012

Morgan Stanley Settles Fraud Case for $8 Million, of course without admitting guilt!

Morgan Stanley agreed Wednesday 5-9-07 to settle federal fraud charges stemming from its reported failure to get retail stock investors the best prices possible on more than a million over-the-counter transactions.

Over roughly three years, the Securities and Exchange Commission said Wednesday in announcing the settlement, Morgan Stanley's automated trading system delayed the execution of orders and ALTERED TRANSACTION PRICES to the company's financial benefit without telling investors.

These actions affected more than 1.2 million trades valued at around $8 billion, and Morgan Stanley received more than $5.9 million in revenue through the undisclosed changes, the SEC said. The trades took place from October 24, 2001 to December 8, 2004.

Linda Chatman Thomsen director of the SEC's enforcement division said in a statement that "broker-dealers must be dilligent in their efforts to seek the most favorable terms for their customers' orders."

Morgan Stanley did not admit or deny wrongdoing. A spokeswoman, Mary Claire Delaney, said the company was pleased with the settlement and "has corrected the programming issues, established new internal controls and a process for client reimbursement."

The settlement includes reimbursement of more than $5.9 million in improperly obtained revenue, pre-judgment interest of $507,978 and a civil penalty of $1.5 million, the SEC said.

In trading Wednesday, shares of Morgan Stanley added 40 cents, to close at $86.05.

From an AP report in the New York Times.

"Where are the customers yachts?"

Steal a loaf of bread and go to jail. Steal $5 million and get a slap on the wrist!

The most famous portrait of J.P. Morgan (note the arm of his chair that appears to be a knife in his left hand!)


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