Morgan Stanley to Settle Case Against Ex-Broker

A unit of Wall Street powerhouse Morgan Stanley has agreed to pay more than $1 million to settle a case in which one of its former brokers -- a former hip-hop industry insider -- was accused of defrauding customers of $740,000, New York Atty. Gen. Eliot Spitzer said Tuesday.

Spitzer required the payment of penalties and restitution from the company for failing to properly supervise the broker, Gabriele Tamar Smith, even after the company was put on notice. Fifteen clients were affected.

After leaving Morgan Stanley and starting her own money management firm, Smith was known for wearing designer clothes and vacationing with friends from a circle of hip-hop and NBA stars, including Jay-Z and Beyonce, according to the New York Times in 2005.

Smith worked at Morgan Stanley from 1997 to 2001. She could not be reached for comment.