Morgan Stanley Discloses Regulatory Investigation of Fee-Based Accounts
In a recent corporate filing, Morgan Stanley disclosed that securities regulators are investigating whether the firm's Choice account, a fee-based platform in lieu of paying commissions, is in the best interest of investors.
According to the firm, the investigation centers around the "opening and maintenance of certain Choice accounts, the fees charged for certain such accounts and the content of certain Choice marketing materials." Morgan Stanley currently has 26% of its customers in Choice accounts.
Brokerage firms are obligated to sell fee-based accounts only to customers who trade more than a few times per year. Otherwise, firms must recommend commission based accounts.
Source: TheStreet.com, February 11, 2005
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