SEC charges Morgan Stanley with securities fraud

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SEC charges Morgan Stanley with securities fraud
from MarketWatch.com - MarketPulse CHICAGO (MarketWatch) -- The Securities and Exchange Commission on Tuesday charged Morgan Stanley Investment Management with violations of securities laws for its scheme that charged a fund and its investors for advisory services they never got. An investigation uncovered that Morgan Stanley, as the primary investment adviser to The Malaysia Fund told investors and the fund's board of directors that it was using a sub-adviser to give advice and do research. However, the sub-adviser did not provide the promised services even as the fund annually renewed the contract at an eventual cost of $1.845 million to investors. In order to settle the charges, Morgan Stanley will pay more than $3.3 million, the SEC said. "We want to take the advisory fee setting process out of the shadows by scrutinizing the role of investment advisers and fund board members in vetting fee arrangements with registered funds," said Robert Khuzami, director of the SEC's Division of Enforcement, in announcing the penalty.