Morgan Stanley Smith Barney will pay a $15 million penalty as part of a settlement with the Securities and Exchange Commission related to four financial advisers who stole millions of dollars of advisory clients' and brokerage customers' funds.

The financial services firm failed to detect “hundreds” of instances when former employees misappropriated client funds because it did not have a reasonable system in place, said the Securities and Exchange Commission.

A lack of supervision and internal controls at Morgan Stanley Smith Barney allowed four of its investment advisers to steal millions from customers before the behavior was detected, the SEC said in charging the firm.

Morgan Stanley Smith Barney was charged Monday with failing to reasonably supervise four of its advisors - Michael Carter, Chingyuan “Gary” Chang, Douglas McKelvey, and Jesus Rodriguez - who misappropriated almost $10 million in client funds through unauthorized wire transfers and automated clearing house payments.

The Securities and Exchange Commission has ordered Morgan Stanley to pay $15 million for failures that allowed four of its former advisors to misappropriate millions of dollars from advisory client and brokerage customer accounts.

The SEC said the wirehouse’s broker/dealer’s inadequate policies failed to detect hundreds of unauthorized transfers between May 2015 and July 2022 from its customers’ or clients’ accounts.

Morgan Stanley Smith Barney LLC has agreed to pay a $15 million penalty to settle Securities and Exchange Commission charges for failing to prevent four financial advisors from stealing millions in client funds,

The bank failed to detect “hundreds” of instances when brokers misappropriated client funds through unauthorized Automated Clearing House transfers, the SEC said.