Morgan Stanley Fined $1 Million

Morgan Stanley, Dean Witter, Discover & Co. was fined $1 million by the regulatory arm of the National Assn. of Securities Dealers, parent of the Nasdaq stock market, on charges of manipulating the price of 10 stocks in 1995. “We strongly disagree with the NASDR’s conclusions and we will appeal,” Morgan Stanley spokeswoman Jean Marie McFadden said. The NASD also sanctioned seven Morgan Stanley traders, including David Slaine, its former head Nasdaq trader who is no longer with the company. New York-based Morgan Stanley would not comment on his departure. Slaine was fined $100,000 and suspended from the brokerage industry for 90 days. The six other traders were suspended for 30 days and fined $25,000. The agency said it found during a five-day hearing that Morgan Stanley’s OTC desk improperly pushed up the opening price for the stocks to make sure the firm did not suffer losses in another area, at its program trading desk. By pushing up the price, the OTC desk created “locked” and “crossed” markets. A locked market occurs when the bid price equals the sell price in the same security, and a crossed market occurs when the bid price is greater than the sell price of a security.