The Dutch Public Prosecutor has imposed a fine of 101
million euros on two Morgan Stanley entities in London and Amsterdam for
dividend tax evasion, the OM said today (Thursday).
Separately, Morgan Stanley is under
investigation by FINRA over its client screening and risk assessment procedures.
The review, covering October 2021 through September 2024, includes the bank’s
wealth management division, including E*Trade, and its institutional securities
unit.
Regulators have requested information on client risk
scoring, reporting structures, and organizational charts. Earlier submissions
contained incomplete data, prompting the bank to provide additional details.
Dutch Tax Dispute Resolved After Years
The penalty is separate from the tax liability Morgan
Stanley settled with the Dutch Tax Administration at the end of 2024, including
accrued interest, the OM added. Under Dutch law, domestic shareholders can
reclaim or offset dividend taxes, but foreign recipients usually cannot.
According to the OM, Morgan Stanley used a structure that allowed parties who
were not eligible to improperly claim these tax rebates.
Earlier this year, the OM said it would summon Morgan
Stanley. Just before the start of criminal proceedings, the company agreed to
accept the fine.
Morgan Stanley said it was “pleased to have resolved
this historical matter,” which concerned corporate tax returns filed in
the Netherlands more than 12 years ago.
FINRA Fines Morgan Stanley $1.6 Million
Last year in February, FINRA
announced a $1.6 million fine against Morgan Stanley Smith Barney LLC. The
penalty arose from the firm’s repeated delays in closing failed inter-dealer
municipal securities transactions and in securing possession or control of
municipal securities held over 30 days, along with related supervisory
shortcomings.
FINRA found 239 transactions and 247 securities affected
between 2016 and 2021. The firm lacked adequate supervisory systems and updated
procedures only in 2021. Morgan Stanley consented to FINRA’s findings without
admitting or denying the charges, with $1.2 million of the fine allocated to
the MSRB.
This article was written by Tareq Sikder at www.financemagnates.com.
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