SEC-PR-2024-06 (JAN. 12, 2024) Source: https://www.sec.gov/newsroom/press-releases/2024-6 Download: SEC-PR-2024-06 (PDF) PRESS RELEASE | 2024-6 SEC Charges Morgan Stanley and Former Executive Pawan Passi with Fraud in Block Trading Business. The Firm agrees to pay more than $249 million to settle fraud charges and for failing to enforce information barriers. Washington D.C., Jan. 12, 2024 — The Securities […]
Category: Block Trading Fraud
Block Trading involves the purchase or sale of a large number of securities outside of the open market to minimize price impact. Fraud in block trading can manifest in various ways, such as misrepresenting the size or nature of the block to manipulate market perceptions or prices, or engaging in fictitious trades to create false impressions of market activity. Additionally, the illicit use or disclosure of material non-public information (MNPI) in block trading can severely compromise market integrity and mislead investors. This occurs when insiders or those privy to MNPI use such information to trade blocks of securities before the information becomes public, thereby gaining an unfair advantage over other market participants who are unaware of the information. Such practices erode trust in the fairness of markets and violate securities laws designed to protect investors from such abuses.