(HedgeCo.Net) Morgan Stanley Smith Barney LLC (MSSB) has agreed to settle charges that it provided misleading information to clients in its retail wrap fee programs regarding trade execution services and transaction costs. MSSB has agreed to pay a $5 million penalty that will be distributed to harmed investors.<\/p>\n
Wrap fee programs offer accounts in which clients pay an asset-based \u201cwrap fee\u201d that covers investment advice and brokerage services, including trade execution. According to the SEC\u2019s order, MSSB marketed its wrap fee accounts as offering clients professional investment advice, trade execution, and other services within a \u201ctransparent\u201d fee structure. From at least October 2012 until June 2017, some of MSSB\u2019s marketing and client communications gave the impression that wrap fee clients were not likely to incur additional trade execution costs. During that period, however, the order finds that some MSSB managers routinely directed wrap fee clients\u2019 trades to third-party broker-dealers for execution, which in some instances resulted in MSSB clients paying additional transaction fees that were not visible to them. As a result of MSSB\u2019s conduct, the order finds that certain MSSB clients were unable to assess the value of the services received in exchange for the wrap fee paid to MSSB.<\/p>\n
\u201cInvestment advisers are obligated to fully inform their clients about the fees that clients will pay in exchange for services,\u201d said Melissa R. Hodgman, Associate Director in the SEC\u2019s Division of Enforcement. \u201cThe SEC\u2019s order finds that Morgan Stanley Smith Barney failed to provide certain clients in its retail wrap fee programs accurate information about the costs they incurred for the services they received.\u201d<\/p>\n
Without admitting or denying the findings, MSSB consented to the SEC\u2019s order, which finds that MSSB violated provisions of the Investment Advisers Act of 1940, imposes a $5 million penalty, and includes a censure and a cease-and-desist order. The order also creates a Fair Fund to distribute the penalty paid by MSSB to harmed investors.<\/p>\n","protected":false},"excerpt":{"rendered":"
(HedgeCo.Net) Morgan Stanley Smith Barney LLC (MSSB) has agreed to settle charges that it provided misleading information to clients in its retail wrap fee programs regarding trade execution services and transaction costs. MSSB has agreed to pay a $5 million […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,3,16048],"tags":[],"class_list":["post-74113","post","type-post","status-publish","format-standard","hentry","category-hedgeco-networks-press-releases","category-hedgeco-news","category-hedgecovest-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/74113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=74113"}],"version-history":[{"count":1,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/74113\/revisions"}],"predecessor-version":[{"id":74114,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/74113\/revisions\/74114"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=74113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=74113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=74113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}