SEC Ends Probe into Morgan Stanley's Cash Sweep Program

The SEC has concluded its investigation into Morgan Stanley's cash sweep program without pursuing enforcement action, after examining its compliance with regulations. Several banks' cash sweeps faced scrutiny, impacting their wealth management arms. Earlier, Merrill Lynch and Wells Fargo paid penalties for similar compliance failures.

The U.S. Securities and Exchange Commission (SEC) has concluded its investigation into Morgan Stanley's cash sweep program without pursuing any enforcement actions, according to a recent filing by the Wall Street bank. Discussions with the regulator began as early as April of the previous year.

Cash sweep programs enable clients to earn returns on uninvested cash by automatically moving idle funds into either interest-bearing accounts or money market funds, unless opted out by the client. These programs have come under SEC scrutiny, posing challenges to high-margin wealth management businesses at various banks.

Earlier this year, Merrill Lynch and two Wells Fargo advisory firms collectively agreed to a $60 million settlement, addressing SEC charges related to compliance failures concerning their cash sweep programs. Notably, both firms neither admitted nor denied the violations cited by the regulator.

(With inputs from agencies.)