Morgan Stanley’s former managing director for real estate in China was sentenced Thursday to nine months in federal prison.
Garth Peterson, 43, pleaded guilty in April to a one-count criminal information charging him with conspiring to evade internal accounting controls that Morgan Stanley was required to maintain under the FCPA.
He also agreed in April to pay about $250,000 in disgorgement and forfeit Shanghai real estate worth $3.4 million to settle civil FCPA charges filed by the SEC.
The DOJ and SEC declined to charge Morgan Stanley. They said the firm’s compliance program ‘provided reasonable assurances’ that Morgan Stanley’s employees were not bribing government officials. Peterson, they said, was a ‘rogue employee.’
Prosecutors said Peterson secretly arranged to have at least $1.8 million paid to himself and a Chinese official. He also arranged for the Chinese official to acquire valuable Shanghai real estate from a Morgan Stanley fund using a lawyer who didn’t disclose that he was acting for the official.
The DOJ had sought a prison sentence of more than four years.
Because Peterson now has limited assets, according to the presiding judge, Morgan Stanley agreed to waive criminal restitution from him. The SEC also waived 25% of the civil disgorgement of his ‘ill-gotten gains.’