By Bloomberg contributor Jonathan Weil
What had Morgan Stanley done wrong ? The allegations, as written by Galvin’s office, seem to have been crafted with one goal in mind: To make it impossible to answer that question.
Let’s start with the consent order Galvin issued as part of his office’s settlement with Morgan Stanley. The first 92 paragraphs include a description of the securities regulator’s jurisdiction and authority, a list of the relevant parties, and a 16-page statement of facts.
Next is a section called 'violations of securities laws', which lists three counts. Each count says the regulator 'restates and incorporates the facts set forth in paragraphs 1-92'. After that, they say 'the conduct of respondent, as described above, constitutes a violation', followed by citations of the state laws, regulations or other provisions Morgan Stanley supposedly breached. The alleged infractions include dishonest or unethical conduct, disobeying a 2003 consent decree on analyst research, and failing to supervise employees.
Which facts constituted which violations ? There’s no way to determine that from the order. When I asked Galvin during a phone call, he declined to answer the question. As far as I can tell, even viewed in the worst possible light, none of the conduct described by Galvin was an obvious breach of anything.
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Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best in the Business awards from the Society of American Business Editors and Writers in 2009 and 2010.
Weil was a reporter for The Wall Street Journal from 1997 to 2006, and before that at the Arkansas Democrat-Gazette in Little Rock. He grew up in Hollywood, Fla., and has a bachelor's degree from the University of Colorado at Boulder and a law degree from Southern Methodist University.