Morgan Stanley (MS, Financial) announced that the U.S. Securities and Exchange Commission (SEC) has concluded its investigation into the bank's cash sweeping program for advisory accounts without any enforcement action. The bank had been in discussions with regulators since April of last year.
The cash sweeping program allows clients to earn returns on uninvested cash balances by automatically transferring idle cash into an interest-bearing account or money market fund, unless the account holder opts out. Such programs have been under SEC scrutiny, posing a threat to the high-profit wealth management operations of several banks.
Earlier this year, Merrill Lynch and two advisory firms under Wells Fargo agreed to pay a total of $60 million in civil penalties to settle SEC allegations regarding compliance issues in their cash sweeping programs. These firms neither admitted nor denied the SEC's findings.
