I've always warned investors about buying individual bonds. Most folks
don't understand the that the costs for these transactions are huge and
hidden in something called the bid/ask spread. That's the difference
between what the bond dealer paid for it and what they'll charge you.
(Vice versa if you are selling to them)
Here's a story about how our friends at Morgan Stanley were marking up municipal and corporate bonds between 5 and 25%. Wow! Be smart, use bond funds or professional fiduciary bond advisors to get your bond exposure.
Here's a story about how our friends at Morgan Stanley were marking up municipal and corporate bonds between 5 and 25%. Wow! Be smart, use bond funds or professional fiduciary bond advisors to get your bond exposure.
-Christopher
Finra fined Morgan Stanley $90K for unfair trading practices
By Sara Hansard
October 19, 2009
Morgan Stanley has agreed to pay a $90,000 fine to the Financial
Industry Regulatory Authority Inc. to settle charges that it traded
municipal bonds at unfair prices.
Link to Investment NewsThe fine covered 11 corporate-bond trades and three municipal-securities trades made in 2003. Markups or markdowns listed in Finra's complaint ranged from 5.25% to 24.3%. In addition to paying the fine, Morgan Stanley agreed to make restitutions to investors totaling nearly $41,000.
Morgan Stanley agreed to the settlement without admitting or denying the findings. The settlement was reached with Finra in August, but it was not announced by Finra until mid-October.
“We don't comment on regulatory matters,” said Eric Grossman, managing director at Morgan Stanley, when asked about the Finra fine.
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