Reported by Sridhar Natarajan

Morgan Stanley shares fell the most in five months after a report that a cadre of US regulators are scrutinizing the firm’s efforts to prevent potential money laundering by wealthy clients.

The Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices are digging into whether the New York-based bank has done enough to investigate the identities of risky clients, the Wall Street Journal wrote, citing unidentified people familiar with the matter. The Federal Reserve was already known to be looking into those controls last year.

The SEC and the Treasury’s Financial Crimes Enforcement Network have sought information on certain clients outside the US who’ve raised red flags and the bank’s policies to address it, the Journal said. Specifically, the SEC pressed Morgan Stanley about why it did business with some who had been cut off by E*Trade, the digital-trading platform the company acquired.

Read full report: https://www.bloomberg.com/news/articles/2024-04-11/morgan-stanley-stock-drops-after-report-on-probes-of-wealth-unit