In an SEC filing this week, Morgan Stanley disclosed (here) that it’s investigating possible Foreign Corrupt Practices Act violations in China. The bank said in a short statement that “it has recently uncovered actions initiated by an employee based in China in an overseas real estate subsidiary that appear to have violated the Foreign Corrupt Practices Act. Morgan Stanley terminated the employee, reported the activity to appropriate authorities and is continuing to investigate the matter.”
There are several reports (here, here and here) that in December, the China-based managing director of Morgan Stanley Real Estate in Shanghai, Garth Peterson, left the bank. And Morgan Stanley’s global head of property investing, Sonny Kalsi, has also been placed on administrative leave. Some of Morgan Stanley’s property projects involved investments with government-linked Chinese enterprises. Several high-ranking Chinese officials from Shanghai have been arrested in recent years for corruption in connection with deals in the property market.
On Wednesday, Morgan Stanley’s chief executive John Mack and seven other bank CEOs took thier lumps from the House Financial Services Committee over the financial crisis. During his testimony, Mack said, “We are sorry for it. I am especially sorry for what’s happened to shareholders and to all Americans. Clearly, as an industry, we have accountability and we’re taking responsibility. I’ll take responsibility for my firm.”
Morgan Stanley trades on the New York Stock Exchange under the symbol MS.
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