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Morgan Stanley is one of the world’s largest investment firms. Headquartered in Midtown Manhattan, it is listed on the New York Stock Exchange (NYSE), and, despite a reported 10-percent pay cut due to declining profits, the firm’s CEO, James Gorman, reaped a $31.5 million salary in 2022.
But, the firm’s recently declining profits are far from its only concern. In recent years, Morgan Stanley has been at the center of multiple scandals—including many scandals involving allegations of investor fraud. Like most firms, Morgan Stanley typically settles these allegations with the U.S. Securities and Exchange Commission (SEC) without admitting or denying any wrongdoing. Morgan Stanley has also faced numerous complaints from investors in FINRA arbitration.
Background Information on Morgan Stanley
Morgan Stanley has been in business for nearly a century. It was founded in 1935 following the enactment of the federal Glass-Steagall Act. This law prohibited banks and securities firms from operating as a single entity, so Henry Morgan, the grandson of J.P. Morgan, and Harold Stanley spun off Morgan Stanley from the already existing JPMorgan.
In 1997, Morgan Stanley acquired two businesses from Sears—Dean Witter and Discover Card. After a series of name changes spurred by internal disagreement over the firm’s branding and direction, it once again assumed the Morgan Stanley moniker in 2001. Plans to spin off Dean Witter never materialized, though Morgan Stanley did resell Discover in 2007. The firm subsequently acquired E-Trade in 2020 for $13 billion, though E-Trade continues to operate under its own name.
As of December 2022, Morgan Stanley had more than $1.1 trillion in assets—a 2.5 percent decline from 2021, when the firm saw an increase of 6.5 percent in total asset value from 2020. It currently has roughly $6.5 trillion in assets under management and approximately 16,000 investment advisors across the U.S. and around the world.
Who Owns Morgan Stanley?
Morgan Stanley is a publicly traded company. Its shares trade on the NYSE. Some of the firm’s largest institutional investors (as of early 2023) include SSgA Funds Management, Inc. (7.14 percent), The Vanguard Group, Inc. (6.34 percent), BlackRock Fund Advisors (3.54 percent), Wellington Management Co. LLP (2.72 percent), and JPMorgan Investment Management, Inc. (2.11 percent). In total, institutional investors (including mutual funds) hold nearly two-thirds of Morgan Stanley’s outstanding shares.
Is Morgan Stanley a Real Bank?
Morgan Stanley is an investment firm, not a bank. However, the firm owns Morgan Stanley Bank, N.A., a national banking subsidiary. While the firm’s investment management operations originally fell under the same umbrella as its banking operations (under the name JPMorgan), it was forced to separate following the enactment of the Glass-Steagall Act in 1935.
Is Morgan Stanley a Good Place to Invest?
The answer to this question depends on who you ask. While Morgan Stanley is one of the world’s largest investment firms—with millions of clients and trillions of dollars under management—it has also been known for getting in trouble with the SEC and other regulators. Morgan Stanley has also faced numerous lawsuits and arbitration claims from investors. Some examples of recent SEC actions against Morgan Stanley include:
- In September 2022, Morgan Stanley was part of a $1.1 billion settlement with the SEC involving allegations that the firm (among several others) violated their recordkeeping obligations under federal securities laws. Morgan Stanley was one of eight firms to pay $125 million in the settlement.
- Also in September 2022, Morgan Stanley agreed to a $35 million settlement arising out of charges that the firm was responsible for “extensive failures, over a five-year period, to protect the personal identifying information, or PII, of approximately 15 million customers.” This included hiring a moving company “with no experience or expertise in data destruction” that sold thousands of the firm’s devices to a third party (which eventually sold many of the devices at public auction).
- In June 2016, Morgan Stanley agreed to a $1 million settlement with the SEC related to a cybersecurity breach affecting customer data. According to the SEC, a firm employee was able to impermissibly access customer data over a four-year period and download the data to a personal server, which was subsequently hacked by a third party.
Again, these are just examples. Unfortunately, while these are all fairly egregious failures on the part of a major investment firm, these types of issues are not unique to Morgan Stanley. As a result, investors need to be very careful about where they choose to invest, and no matter where they invest, they need to monitor their accounts carefully for signs of fraud.
How Do I Report Fraud to Morgan Stanley?
Morgan Stanley has a fraud reporting hotline that customers can use to report suspected instances of third-party fraud (i.e., unauthorized access to their accounts). However, if you believe you may have a fraud claim against Morgan Stanley, you should not contact the firm directly. Instead, you should consult with a lawyer about your legal rights—including your right to recover your investment losses in FINRA arbitration.
How Do I File a Claim Against Morgan Stanley?
If you believe you may have a claim against Morgan Stanley for fraudulent investment losses, your first step is to consult with a lawyer who represents individual investors. While investment fraud can take a variety of forms, investors must be able to identify a specific form of fraud and relate this fraud to their investment losses. An experienced lawyer will be able to review your account statements, any relevant communications, and any other documentation you may have to assess your legal rights. Your lawyer may be aware of similar claims pending against Morgan Stanley as well
Discuss Your Claim Against Morgan Stanley with a Lawyer at Zamansky LLC
If you need to know more about filing an investment fraud claim against Morgan Stanley, we encourage you to contact us promptly. Our lawyers have decades of experience helping individual investors recover fraudulent losses from Morgan Stanley and other investment firms. To arrange a free consultation at Zamansky LLC, please call 202-742-1414 or request an appointment online today.