Morgan Stanley Settles Block Trading Probe with $249 Million Penalty

Bank enters nonprosecution agreement after employee misuse of confidential information, implements new policies to prevent future misconduct.

Morgan Stanley has agreed to pay $249 million in penalties to settle investigations into the firm's practices in handling some large stock trades.
The investigations found that at least one employee at the bank had misused confidential information in connection with so-called block trades of stocks by some of its customers.
Morgan Stanley entered into a nonprosecution agreement with the government and will not be charged with any criminal wrongdoing.
Pawan Passi, the head of the investment bank's equity syndicate unit, and one of his subordinates disclosed private, potentially market-moving information about forthcoming block trades to some investors.
Morgan Stanley has implemented remedial measures to create clearer policies governing its communications with buy-side investors ahead of block trades and trained its employees on the policies.