Eric R. Dinallo, chief of the investment protection bureau in the office of the New York State Attorney General Elliot Spitzer, has joined Morgan Stanley as managing director and head of regulatory affairs. In this role, Dinallo will work federal and state regulators, as well as industry self-regulatory organizations. He will start Sept. 8, reporting to Chief Legal Officer Donald Kempf.

The securities industry is facing new challenges, Kempf said in a statement. Just last week, Massachusetts regulators sued Morgan Stanley for enticing its brokers with higher commissions and bonuses to sell in-house funds. The state believes these sales tactics earned Morgan $5 million to $8 million in commissions since January alone. Regulators are also looking into the relationship between Morgan Stanley’s analysts and IPO underwriting.

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