Morgan Stanley is paying $2mn to settle allegations that it failed to ensure trades it completed for a former top executive of First Republic Bank in the run-up to the bank’s collapse last year were not based on insider information.
The settlement, which is with state securities regulators in Massachusetts, was announced on Friday morning.
It does not name the former bank executive nor charge anyone with insider trading. But the stock sales detailed in the settlement match those of First Republic’s founder and former executive chair James Herbert II, who sold more than $6.8mn shares in February and March of last year, before a large decline in the bank’s shares, which were eventually completely wiped out when the bank collapsed.
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