On July 12, 2011, the Securities and Exchange Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (Exchange Act), Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) against Jennifer Kim (Kim).
The Order finds that respondent Kim and her supervisor Larry Feinblum, two traders at Morgan Stanley & Co., Inc. engaged in misconduct that had the effect of concealing from risk managers the extent of the risk associated with their proprietary trading and that ultimately contributed to millions of dollars of losses in their trading books. The Order finds that from at least October through December 2009, Kim and her supervisor executed numerous trades in certain securities that they traded for MS & Co. that created risk exposure substantially in excess of internal limits that could be exceeded only with supervisory approval. The Order further finds that to conceal from the firm that this risk exposure exceeded internal risk exposure limitations (the “excessions”), Kim and her supervisor entered in MS & Co.’s risk management system swap orders — on at least thirty-two occasions — that they had no intention of executing and that they promptly canceled after entering the orders in the system. The Order also finds that Kim and her supervisor entered these orders for the sole purpose of temporarily and artificially reducing the net risk exposure in the securities, as recorded in certain of the firm’s risk management systems, in order to pursue a strategy that sought to profit from price differences between U.S. and foreign markets. The Order finds that Kim and her supervisor cancelled the swap orders after they knew that the risk management systems had captured false and misleading information about their net risk exposure and continued to execute their arbitrage trading strategy at positions beyond MS and Co.’s net risk limits. As a result of Kim’s and her supervisor’s misconduct, MS & Co. unwound the unauthorized trading positions, ultimately sustaining a loss of approximately $24.47 million.
Based on the above, the Order orders Kim to cease and desist from committing or causing any violations and any future violations of Section 13(b)(5) of the Exchange Act. The Order also bars Kim from association with any broker or dealer with the right to reapply after three (3) years, and requires Kim to pay a $25,000 civil penalty.
This information, which is publicly available on the SEC website, it being provided by The White Law Group.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
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Tags: broker fraud, investment fraud, Jennifer Kim Morgan Stanley, Morgan Stanley fraud, Morgan Stanley investment losses, Morgan Stanley lawsuit, Morgan Stanley proprietary product, Morgan Stanley SEC investigation, Morgan Stanley trader, Securities Attorney, Securities Lawyer Last modified: July 17, 2015