Multiple federal regulators are investigating Morgan Stanley’s wealth management division, which caters to high net-worth individuals. The investigation is centered on whether Morgan Stanley is properly vetting clients for money-laundering risk, The Wall Street Journal reported Thursday.
Involved regulators reportedly include the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices. Shares of Morgan Stanley dropped as much as 6.7% Thursday after the Journal's report was published.
Regulators are focused on finding whether Morgan Stanley has been sufficiently investigating the identities of prospective high-net-worth clients, where their wealth comes from and how the bank monitors their financial activity.
Morgan Stanley’s wealth management unit provides brokerage, investment advisory, custodial and financial-planning services to high-net-worth clients as well as small to midsize businesses.
The wealth management division has been booming for Morgan Stanley, with 2023 net revenue reaching $6.65 billion to outperform analysts’ expectations of $6.4 billion.