The SEC brought an enforcement action against dually registered broker and investment adviser Morgan Stanley Smith Barney ("MSSB") for faulty fee billing of some clients. The SEC stated that MSSB overbilled clients because of coding and administrative errors included in one of its predecessor firm's billing systems. In addition, the SEC found compliance, custody and books and records violations in MSSB's operations.
Practical Perspective: Compliance is an on-going responsibility and challenge for even the largest and, presumably, most sophisticated firms. All firms should have sufficient compliance resources and a structured approach to compliance and risk assessment.