Morgan Stanley has been fined $249m after an employee leaked plans by clients to sell shares in companies they held.
In April 2021, Oaktree Capital Management contacted the investment bank regarding a possible sale of a large stake in Star Bulk Carriers, according to case documents cited by Bloomberg.
That information was passed on by Pawan Passi, who worked for the equities unit at Morgan Stanley, to the founder and head of an investment firm.
The investment firm began shorting Star Bulk’s stock after receiving the information.
It bought $2m Star Bulk shares to cover its bet when Morgan Stanley offloaded 10.6m shares it had bought from Oaktree.
Morgan Stanley made a profit of $3.7m from the trades.
The US Securities & Exchange Commission did not identify the companies and investment firms involved in the case, but details of the transactions reveal the parties, Bloomberg said.
Passi also leaked information about block trades involving investment giant Blackstone and the private equity firm Cinven.
The settlement between Morgan Stanley and the SEC ends a multi-year investigation. Authorities did not pursue a criminal case against Passi.
Oaktree has been Star Bulk Carriers’ anchor investor for nine years, but the US investment giant has been gradually reducing its once controlling stake to a current holding of just 7%.
