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Not Approved:
The SEC charged Morgan Stanley and one of its investment advisor reps for misleading clients about the money managers being recommended to them and failing to disclose conflicts of interest. According to the SEC, Morgan Stanley breached its fiduciary duty to advisory clients in its Nashville, Tenn., branch, by making misstatements about a financial planning program and the way it selects investments. Despite disclosure documents that assured investors only vetted managers approved for its Vision 1 program would be used in investments, one top producing Morgan Stanley advisor repeatedly steered his clients to three unapproved managers between 2000 and 2006. The firm and the advisor collected “substantial” commissions and fees from the managers, according to the SEC. Morgan Stanley agreed to settle the charges for $500,000. “Investment advisers are required to put investor interests ahead of their own and provide their clients with complete and truthful information at all times,” said Scott W. Friestad, Associate Director of the SEC's Division of Enforcement. “Morgan Stanley said one thing and did another when recommending money managers who had not been properly vetted by the firm, and [the advisor] repeatedly disregarded Morgan Stanley's policies and procedures and reaped undisclosed financial benefits from these unapproved managers.”
