Although it recently caught one of its own brokers extracting $50 million from clients in Puerto Rico,
Carlos H. Soto, 59, admitted in an apparent confession that he took customers money and told them it was being placed in low-risk investment vehicles, like mortgage-backed securities. Instead, he invested the money in higher-risk and higher-reward vehicles, earning a hefty profit for himself while returning what would have been the proper amount of money to the customer had he or she been investing in the lower-risk operation.
In some cases, though, especially recently, the
Firms like Morgan Stanley employ hugely expensive and sophisticated systems designed to detect and eventually thwart any attempts at broker fraud. But, apparently, Soto was able to circumvent detection. His use of different banks and clever altering of documents may have helped prolong his creative crimes. Still, many in the industry are puzzled.
SEC lawyer Alise Johnson told the Journal , "The investigation into Morgan Stanley and what monitoring it did is ongoing."
The Journal says a few clues, like the one 12 years ago in which Soto opened accounts at Morgan Stanley with fictitious names, could have helped him get caught faster. But it wasnt until Feb. 19 of this year that his past misdeeds finally caught up with him.
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The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
