A futures commission merchant agreed to settle CFTC charges of supervisory failures relating to overcharges for exchange and clearing fees.
In an Order, the CFTC alleged that Morgan Stanley & Co., LLC ("Morgan Stanley"), a registered futures commission merchant, did not "implement and maintain adequate systems and procedures" to reconcile charges for exchange and clearing fees with the amounts ultimately charged to customers.
According to the Order, Morgan Stanley implemented a proprietary system to (i) calculate the amount charged to customers and owed to exchanges and (ii) reconcile amounts billed by exchanges with the amount believed to be owed to exchanges. The CFTC alleged that the software was insufficient for the task, even after the firm had made some improvements. The CFTC charged Morgan Stanley with violating CFTC Rule 166.3.
Morgan Stanley has fully refunded nearly all of the customers affected by overcharges, and agreed to settle the charges by paying a $500,000 monetary penalty.
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