NASD Fines Division of Morgan Stanley
The NASD said Tuesday that it had fined an arm of investment firm Morgan Stanley $1.5 million and ordered the firm to pay more than $4.6 million in restitution for failing to adequately supervise its fee-based brokerage business.
More than 3,500 Morgan Stanley DW Inc. customers will be receiving restitution, said the NASD, formerly the National Assn. of Securities Dealers.
Fee-based brokerage accounts are an alternative to traditional commission-based accounts. In a fee-based account, a customer is charged an annual fee that is either fixed or a percentage of the assets in the account, rather than a commission for each transaction as in a traditional brokerage account.
Experts say that people with small accounts or little trading activity can usually save money by paying for trades on a commission basis. The NASD said “firms have an obligation to their customers to periodically reassess” whether fee-based accounts are appropriate.