Morgan Stanley will pay $249 million to settle criminal, SEC block trade probes

• Morgan Stanley agreed to pay $249 million to settle a criminal investigation and a related Securities and Exchange Commission probe.
• The investigations related to the unauthorized disclosure of block trades to investors by Pawan Passi, the bank's supervisor for such trades, and another employee.
• The SEC said the bank generated more than $100 million in illicit profits as a result of misconduct by Passi.
• The bank entered into a non-prosecution agreement, while Passi got a deferred prosecution agreement.

Morgan Stanley has agreed to pay a total of $249 million to settle a criminal investigation and a related Securities and Exchange Commission probe of the unauthorized disclosure of block trades to investors by the bank's supervisor for such trades and another employee, authorities said Friday.

As part of the settlement, Morgan Stanley entered into a non-prosecution agreement with the U.S. Attorney's Office for the Southern District of New York for making false statements related to certain block trades executed from 2018 through August 2021, the office said.

Morgan Stanley, which admitted responsibility for its employees' actions, is obligated under the deal to cooperate with and provide information to U.S. authorities for at least three years.

The SEC charged Morgan Stanley with "failing to enforce its policies concerning the misuse of material non-public information related to block trades," that agency said.

Block trades typically involve large numbers of shares of a company's stock in privately arranged transactions executed outside public markets.

The SEC said the bank generated more than $100 million in illicit profits as a result of misconduct by Pawan Passi, the former head of the bank's U.S equity syndicate desk.