Morgan Stanley will be covering the losses incurred by its investors who purchased mutual funds after the bank failed to provide the fund prospectus. The bank will be shouldering the losses of these clients to avoid any future litigation. Brokerage clients who opted for electronic delivery of the prospectus can now rescind their purchase.
For clients who purchased the said funds from November 8 2013 until August 14, 2014, they are eligible for buyback from Morgan Stanley without any losses. For those clients who have already sold their holdings bought in that timeframe can regain ther losses from the bank.
Morgan Stanley is one of the world's biggest financial advisors and handles accounts of more than 4 million clients. The bank said that it was the failure of the system that the bank was not able to deliver the said prospectuses to its investors on time.
Christine Jockle, a spokeswoman for Morgan Stanley said that there was an "inadvertent error" in the system. The bank has already corrected the problem after they discovered it and is offering its clients to rescind their holdings. Morgan Stanley has also notified both the Financial Industry Regulatory Authority and Securities and Exchange Commission on the issue.
The bank did not disclosed how much loss they will be shouldering from the rescission offer.
Morgan Stanley is an American multinational financial services corporation based in New York City. The bank operates in more than 42 countries with roughly 1,300 offices and 60,000 employees. Their main expertise are global wealth management, institutional securities and investment management. As of end 2013, the bank had declared $1.9 trillion in client assets under their management
In 2009, the bank acquired Smith Barney from Citigroup Inc. making their wealth management unit twice the size. They had already completed the integration of their brokerage platform last 2012, allocating $500 million in improving existing system flaws.
