SEC Accuses Morgan Stanley, Pawan Passi Over Fraud Charges

(RTTNews) - The Securities and Exchange Commission charged Morgan Stanley (MS) and former executive of its equity syndicate division Pawan Passi for abusing the trust of customers by disclosing confidential data related to large-volume securities transactions known as "block trades" over multiple years.

The SEC said that the Manhattan-based firm and Passi leaked the confidential information to win more block trade business through which the parties earned millions of dollars. It added that the firm's actions for personal gains violated the federal securities laws, betrayed the investors' trust and degraded market integrity.

The federal agency also found that these fraud activities were done by the firm willfully. Hence, it ordered the investment banking firm to pay approximately $138 million in disgorgement, around $28 million in pre-judgement interest, and $83 million as civil penalty, whereas Passi was imposed with associational, penny stock and supervisory bars and was ordered to pay $250,000 in civil penalty.

At the same time, criminal resolutions against both parties were charged by the U.S. Attorney's Office for the Southern District of New York.