MA Secretary Galvin Charges Morgan Stanley with Running Unethical Sales Contests to Cross Sell Banking Business to Brokerage Customers

COMMONWEALTH OF MASSACHUSETTS OFFICE OF THE SECRETARY OF THE COMMONWEALTH SECURITIES DIVISION ONE ASHBURTON PLACE, ROOM 1701 BOSTON, MASSACHUSETTS 02108

IN THE MATTER OF: MORGAN STANLEY SMITH BARNEY LLC, RESPONDENT. Docket No. E-2016-0055 ADMINISTRATIVE COMPLAINT I. PRELIMINARY STATEMENT The Enforcement Section of the Massachusetts Securities Division of the Office of the Secretary of the Commonwealth (the "Enforcement Section" and the "Division," respectively) files this Administrative Complaint (the "Complaint") to commence an adjudicatory proceeding against Morgan Stanley Smith Barney LLC ("Respondent") for violations of MASS. GEN. LA ws ch. 11 OA, the Massachusetts Uniform Securities Act (the "Act"), and the corresponding regulations promulgated thereunder at 950 MASS. CODE REGS. 10.00 - 14.413 (the "Regulations"). The Enforcement Section alleges that Respondent engaged in acts and practices in violation of Section 204 of the Act. The Enforcement Section seeks an order: 1) finding as fact the allegations set forth below; 2) finding that all the sanctions and remedies detailed herein are in the public interest and necessary for the protection of Massachusetts investors; 3) requiring Respondent to permanently cease and desist from further conduct in violation of the Act and the Regulations; 4) censuring Respondent; 5) imposing an administrative fine on Respondent in such amount and upon such terms and conditions as the Director or Presiding Officer may determine; 6) requiring Respondent to provide equitable relief to all customers who entered into securities-based loans pursuant to the Sales Contest detailed herein; and 7) taking any such further action which may be necessary or appropriate in the public interest for the protection of Massachusetts investors.

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