FINRA (Financial Industry Regulatory Authority) has fined investment giant Morgan Stanley the sum of USD 875,000 for not providing accurate trade information, also called blue sheets, within the stipulated time and in automated format when asked by SEC and FINRA.
FINRA discovered that Morgan Stanley witnessed major failures with regards to blue sheet system that were used for compiling and producing blue sheet information from 2014 to 2017.
Morgan Stanley has neither denied nor admitted the FINRA charges. However, the company has consented to FINRA’s findings.
The regulator has further alleged that banks in the US made several deficient submissions of blue sheets with inaccurate or missing information, majorly due to undetected coding mistakes. These issues involved almost 869 incorrect blue sheets on around 156,678 transactions, which show that Morgan had improper processes to validate accuracy of its data submissions to FINRA and SEC.
This caused the financial institute to present wrong identifier data, including omitting a few transactions, duplicate transactions, reporting of short transactions long, failing to identify the order-execution timing in more than 102,262 trades.
Notably, blue sheets offer crucial detailed data related to securities transactions, which includes trade date, security, customer name, share quantity, price and if it was short sale, buy or a sale transaction.
