NEW YORK/WASHINGTON, Jan 12 (Reuters) - Morgan Stanley (MS.N) has agreed to pay $249.4 million for making false statements in connection with the bank's block trading practices, U.S. authorities said on Friday, resolving a years-long government probe.
The deal resolved allegations of deception from the Manhattan U.S. attorney's office and charges of fraud and compliance failures from the Securities and Exchange. The total payments include penalties to both agencies as well as restitution, and forfeiture of ill-gotten gains, the Justice Department and SEC said in their statements.
The Justice Department also agreed to hold off prosecuting Pawan Passi, the former head of the bank's U.S. equity syndicate desk, who admitted to misconduct from 2018 to August 2021.
A lawyer for Passi said they are pleased the U.S. attorney's office did not pursue a criminal conviction, noting the settlements allow him to "move past two very difficult years of intense government scrutiny of the block trading practices on Wall Street."
The resolution draws a line under a longstanding legal worry for the bank. For years, the U.S. Securities and Exchange Commission and criminal prosecutors were investigating so-called "block trades" that the bank executed on behalf of clients.
Morgan Stanley admitted to making false statements in connection with such trades from 2018 through August 2021 and the bank has since rolled out clearer policies, authorities said.
Reporting by Chris Prentice and Jonathan Stempel in New York and Doina Chiacu in Washington;
