REGULATION

Morgan Stanley fined $500k for overcharging clients

Clients of Morgan Stanley were overcharged more than $1.5 million for exchange and clearing fees.

By Hayley McDowell hayley.mcdowell@strategic-i.com September 29, 2017 11:19 AM GMT

Morgan Stanley has been fined $500,000 for overcharging client exchange and clearing fees due to automated system failures.

An investigation by the US Commodity Futures Trading Commission (CFTC) found the investment bank did not supervise the reconciliation of fees with the amounts it charged for transactions with CME, ICE Futures US and other exchanges.

Between 2009 and 2016, Morgan Stanley overcharged clients more than $1.5 million for transactions, and an affiliate of the bank overcharged clients more than $1.4 million.  

The CFTC said the bank’s automated system failed to account for, and protect against, the risk of overcharging customers for exchange and clearing fees.

“For a substantial majority of the relevant period, [Morgan Stanley] had no automated system in place to detect instances where it may have overcharged customers for exchange fees,” the US authority said.

Morgan Stanley has since fully refunded nearly all of the affected clients and has modified its automated systems to ensure potential overcharges are flagged in future.