The Financial Industry Regulatory Authority says it has censured and fined Morgan Stanley over allegations that its research reports contained errors.

Between Aug. 30, 2019, and Feb. 28, 2020, the company allegedly put out around 11,000 equity research reports that included inaccurate stock ratings in their price charts, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.

The errors were the result of an alleged lack of a supervisory system properly designed to ensure the information was correct, Finra says.

More specifically, the company revised the software used to generate price charts approximately around August 2019, in order meet new European Union regulatory requirement about the length of disclosures for recommended securities, according to the letter of acceptance.

The software, however, “contained a typographical error that caused the price charts in certain research reports to display stock ratings from five years prior to the report, but labeled those ratings, inaccurately, as being from three years prior to the report,” Finra said.

After a firm supervisor spotted the problem in January 2020 and escalated the issue, Morgan Stanley nonetheless continued publishing reports with inaccurate historical ratings until the end of February that year, according to the letter of consent.

Moreover, between April 7 and May 17, 2021, Morgan Stanley allegedly didn’t accurately disclose required beneficial ownership information in 1,616 equity research reports, following the acquisition of an unnamed investment management company, Finra says.

The watchdog added that the company provided “extraordinary cooperation” in addressing the issues, including hiring outside counsel to correct both issues before any regulator detected them, voluntarily improved its supervisory systems and assisted Finra with its investigation.

Morgan Stanley consented to a censure and to pay a $325,000 fine without admitting or denying the findings, according to the letter of acceptance.

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