Morgan's 9/11 Excuse Falls Flat

"It is essential that firms comply with discovery obligations in arbitration proceedings and respond fully and truthfully to regulatory requests," said James S. Shorris, the NASD's head of enforcement. "In this case, we charge that Morgan Stanley's conduct fell far below those standards, with the firm repeatedly making false statements about the existence of important evidence, and failing to provide that evidence in numerous proceedings.

This is not the first time that Morgan Stanley has run into trouble with regulators over allegations it failed to produce requested emails.

Earlier this year, the SEC ordered Morgan Stanley pay a $15 million fine to settle allegations that the investment firm had repeatedly failed to turn internal emails requested by regulators. In that matter, the SEC charged Morgan Stanley failed to produce "tens of thousands of emails'' that were repeatedly demanded by regulators over a five-year period, beginning in 2000. The SEC said the firm's actions "compromised'' the two investigations.