RegAlert2017-02-14
Added · Updated
SEC no-action letter: Morgan Stanley waiver of ineligible issuer status under Rule 405
The Division of Corporation Finance grants Morgan Stanley and Morgan Stanley Finance LLC a waiver from being classified as ineligible issuers under Rule 405 of the Securities Act, allowing them to retain their well-known seasoned issuer status despite a cease-and-desist order against subsidiary Morgan Stanley Smith Barney LLC. The determination is based on a showing of good cause, noting that the subsidiary's violations involved compliance failures regarding single-inverse ETF sales rather than the issuer's disclosure obligations, and that the relevant policy has been retired. The waiver is effective upon the entry of the Order and remains subject to the subsidiary's compliance with its terms, with the Commission reserving the right to revoke or condition the waiver if facts differ or compliance fails.
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February 14, 2017
Elaine C. Greenberg, Esq.
Greenberg Traurig, LLP
2101 L Street NW, Suite 1000
Washington, DC 20037
Re: In the Matter of Innovative Business Solutions, LLC Morgan Stanley and Morgan Stanley Finance LLC – Waiver Request of Ineligible Issuer Status under Rule 405 of the Securities Act Dear Ms. Greenberg:
This is in response to your letter dated February 8, 2017, written on behalf of Morgan Stanley (“MS”) and Morgan Stanley Finance LLC (“MSFL”) and constituting an application for relief from MS and MSFL being considered “ineligible issuer[s]” under clause (1)(vi) of the definition of ineligible issuer in Rule 405 of the Securities Act of 1933 (“Securities Act”). MS and MSFL request relief from being considered ineligible issuer(s) under Rule 405, due to the entry on February 14, 2017 of a Commission Order (“Order”) pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) against Morgan Stanley Smith Barney LLC (“MSSB”). The Order requires that, among other things, MSSB cease and desist from committing or causing any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder. Based on the facts and representations in your letter, and assuming MSSB complies with the Order, the Commission, pursuant to delegated authority, has determined that MS and MSFL have made a showing of good cause under clause (2) of the definition of ineligible issuer in Rule 405 and that MS and MSFL will not be considered ineligible issuers by reason of the entry of the Order. Accordingly, the relief described above from MS and MSFL being ineligible issuers under Rule 405 of the Securities Act is hereby granted. Any different facts from those represented or failure to comply with the terms of the Order would require us to revisit our determination that good cause has been shown and could constitute grounds to revoke or further condition the waivers. The Commission reserves the right, in its sole discretion, to revoke or further condition the waivers under those circumstances. Sincerely, /s/ Tim Henseler Chief, Office of Enforcement Liaison Division of Corporation Finance
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