The deal not only calls for Morgan Stanley to more closely monitor whether customer accounts are being managed in a risky manner, it provides for the company to implement better employee training, Reuters reported. Finally, Morgan Stanley agreed to pay $25,000 to a former client, $75,000 to the Investor Protection Trust, a nonprofit group promoting investor education and $100,000 to reimburse the State’s investigation costs.
At issue is advice Morgan Stanley gave to several Microsoft employees, who saw the value of their stock options climb during the technology stock boom. Washington State charged in its original complaint, served against the firm in late 2003, that Morgan Stanley brokers pushed Microsoft employees to cash out stock options early to make risky investments or to borrow against the value of their options.
The dispute went back to the drawing board in May after state officials in Washington, home to Microsoft’s headquarters in Redmond, withdrew a settlement agreement with Morgan Stanley, saying that the pact would have been difficult to enforce. Morgan Stanley countersued and a closed hearing was scheduled for last week but was postponed as negotiations took place (See Morgan Takes Microsoft Stock Dispute to Court ).
“These supervisory revisions will result in better oversight of Morgan Stanley customer accounts throughout the country,” Michael Stevenson, Director of Washington’s department of financial institutions, told Reuters.