Morgan Stanley fined $5 million for swap data reporting failures. Morgan Stanley Capital Services LLC has been slapped by the US securities regulator with a fine of $5 million to settle federal court charges for suspected violations of separate reporting of swap details.
The Commodity Futures Trading Commission (CFTC) ordered the penalty after finding Morgan Stanley had inaccurately reported swap data for approximately 3 million swaps. The reporting failures took place from December 31, 2012 or possibly earlier.
Primary economic terms data fields, such as Legal Entity Identifier, Unique Swap Identifier, notional number, execution venue LEI, and price notation, were found by authorities to contain reporting errors.
Furthermore, in its swap data reporting systems, the fault saw almost half of its swaps for one asset class not disclosed in a timely manner as mandated by the CFTC regulation and outside the time parameters of the regulators.
Given the extent of the failures, the CFTC requested, and Morgan Stanley consented to, the appointment of a qualified outside consultant to facilitate its compliance with its swap data reporting obligations.
Regarding the swaps action, CFTC director of enforcement, James McDonald says “This case demonstrates once again the importance of complying with the CFTC’s swap data reporting requirements. The CFTC will continue to scrutinize closely entities that do not meet their reporting obligations and, as appropriate, will continue to bring cases in this area.”
In a separate enforcement action, earlier this year, Morgan Stanley was fined $875,000 by the Financial Industry Regulatory Authority for failing to provide accurate trade data, also known as blue sheets, in an automated format.
FINRA discovered that from at least 2014 through 2017, Morgan experienced massive failures with its blue sheet systems used to compile and produce blue sheet data.