Morgan Stanley Finalizes Settlement

Morgan Stanley has finalized its $19-million settlement with the New York Stock Exchange, covering the company’s lapses in issuing prospectuses as well as two separate cases of employee embezzlement and fraud that totaled $61.4 million, the exchange said Wednesday.

The unrelated embezzlement cases, for which Morgan Stanley was fined $6 million as part of the settlement, involved a branch office representative in San Juan, Puerto Rico, who bilked investors out of $56 million from 1991 to 2004, and an unidentified fixed-income manager in New York who diverted $5.4 million to his own accounts from 1998 to 2002.

The rest of the settlement came from Morgan Stanley’s failure to send prospectuses to investors considering the purchase of new stock issues, a violation of both Securities and Exchange Commission and NYSE regulations. Other, smaller regulatory lapses were also involved in the settlement, which was finalized last week, according to an NYSE spokesman.

Morgan Stanley settled the various cases without admitting guilt, the NYSE said. The company declined to comment.