Morgan Stanley Will Close Thousands of Accounts in Queue for Review
Morgan Stanley has informed brokers this week that they may have to shutter or freeze accounts that are in queue for “enhanced due diligence” amid a processing backlog.
Brokers were told they would have to close yet-to-be reviewed accounts with a balance below $5 million and severely restrict accounts over $5 million by disallowing deposits and withdrawals or limiting trading.
The information was revealed by Advisor Hub, based on two sources at the firm. It affects several thousand of new Morgan Stanley accounts that are in the process of being opened or subject to regular reviews. The threshold is higher for international accounts requiring enhanced diligence, including Venezuela at $25 million, and other Latin American/Caribbean countries at $10 million, according to the sources. Accounts in other geographies are subject to the same $5 million cutoff as domestic accounts.
Morgan Stanley has a high volume of new accounts amid rapid growth fueled in part by its acquisition of E*Trade Financial in 2020. It counts more than 2.3 million client relationships in its advisor-led business but does not report total number of accounts.
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1) Are there any other options for redeeming my points if my account is closed?
2) Will my points be worth anything if my account is closed?
3) What happens to my points if my account is closed?
These accounts are likely those that pose compliance risk or litigation risk.