The Securities and Exchange Commission fined Morgan Stanley Smith Barney LLC $225,000 over swap transactions involving municipal bonds.
The regulator said the broker/dealer recommended 135 swap transactions in which retail customers sold one municipal bond while purchasing another bond that was either nearly identical to the bond sold or that appeared to have no economic benefits. The SEC said there was no evidence Morgan Stanley Smith Barney employees reviewed each bond swap before recommending the transaction to customers, as required under rules of the Municipal Securities Rulemaking Board.
The violations took place between June 2013 and December 2017.
Morgan Stanley Smith Barney received $342,141.95 in commissions and fees upon execution of the swap transactions. It has paid $394,556.85, including interest, in remuneration to customers, the SEC said.
