Jump to
Three more US regulatory bodies have opened investigations into Morgan Stanley's wealth management division over its handling of potentially risky clients, according to a Wall Street Journal report citing an anonymous source.
The developments follow the Federal Reserve's on-going scrutiny of the division over its money laundering controls. The Securities and Exchange Commission, the Office of the Comptroller of the Currency, and the US Treasury are now also involved in examining the thoroughness of the division's investigations into its clients' wealth sources and financial activities.
Morgan Stanley and the regulatory bodies declined to comment on the matter.
The news led to a 5.3 per cent drop in Morgan Stanley's stock, which has seen significant growth recently, largely driven by the success of its wealth management division under CEO James Gorman's leadership.
The WSJ reported that the SEC raised concerns about the vetting of certain clients, including a billionaire with connections to Russia who faced UK sanctions. The OCC also reportedly flagged the need for more attention to customer due diligence.
The investigations into Morgan Stanley’s wealth management division comes after it made a settlement in January related to allegations of leaking confidential information in its block trading business, which cost the bank $249mn.
—
Chinese victims of a £5bn investment fraud orchestrated by Tianjin Lantian Gerui Electronic Technology are pleading for Beijing's intervention to recover more than £3bn worth of bitcoin seized in the UK, as reported by the Financial Times.
A group representing the victims has submitted a letter to China’s foreign ministry urging negotiations with the UK government. According to the group, nearly 2500 Chinese victims of the fraud have supported the plea with their signatures.
The request follows the recent conviction of Jian Wen in Southwark Crown Court for her involvement in helping her employer Zhimin Qian convert some of the bitcoin into assets.
Qian, the mastermind behind the scam, absconded with funds from more than 128,000 Chinese investors and converted them into bitcoin, fleeing to London under a false identity.
UK authorities seized 61,000 bitcoin during a raid on Qian and Wen’s mansion in 2018, now valued at more than £3bn.
In the letter seen by the FT, the victims called on Chinese authorities to collaborate with UK judicial departments to establish their ownership of the bitcoin. They reject the prospect of the assets being permanently confiscated by the UK government. The UK’s authorities have yet to clarify their plans for the seized bitcoin.
—
The UK's Financial Conduct Authority has warned British banks to prepare for costs arising from a surge in complaints associated with their regulatory investigation into the possible mis-selling of car finance loans.
In a letter published today, the FCA told lenders it would keep a close watch on their financial resources and use “regulatory tools to intervene if we find your firm has not undertaken any assessment of adequacy of financial resources or may be at risk of not having adequate financial resources”.
In February, Lloyds Banking Group, the owner of motor finance company Black Horse, disclosed that it had set aside £450mn for potential payouts. In March, Close Brothers, one of the country's largest motor finance providers, announced a £400mn plan to bolster its capital position in preparation for a redress bill stemming from the scandal.
The FCA said it would provide an update to the market regarding its investigation in September.
—
Credit traders at Barclays and HSBC, alongside those at Goldman Sachs, are reportedly enabling their clients to speculate against the £18.3bn debt of Thames Water amid a mounting crisis at the UK’s leading water utility, as reported by Bloomberg, citing anonymous sources.
The default of its parent company last week, Kemble Water Holdings, has triggered a surge in short interest on specific Thames Water bonds. This occurred after its shareholders, including two Chinese-state owned banks and Dutch lender ING, declined to inject an additional £500mn into the company, following a dispute with the UK water regulator Ofwat.
The shareholders stated that Ofwat's refusal to agree to specific conditions, such as a 40 per cent increase in Thames Water customer bills, meant they were unwilling to move forward with a plan to inject a total of £750mn into Thames Water this year. This investment was intended as part of a £3bn scheme to stabilise the utility company's troubled finances.
If Thames Water's financial issues impair its ability to deliver services effectively, the responsibility would lie with the UK government to initiate special administration proceedings, potentially resulting in temporary nationalisation of the company. HSBC, Barclays and Goldman Sachs declined to comment.
—
MTS Bank, the fintech arm of Russia's largest mobile phone operator MTS has announced its intention to hold an initial public offering. It will become the second Russian bank to pursue an IPO since the imposition of sanctions by Western governments on the country over its invasion of Ukraine in February 2022.
“The funds raised in the IPO will be used by the bank to implement its growth strategy and further scale its high-margin retail business,” the bank said in a statement.
According to Reuters, citing sources familiar with the matter, MTS Bank could raise up to Rbs15bn ($160.3mn) if the deal goes ahead.
Despite being subject to Western sanctions, MTS Bank posted a record net profit of Rbs12.5bn in 2023.
