Now, sticking with banks, Morgan Stanley is still falling after a report that multiple US regulators are scrutinizing the firm’s efforts to prevent potential money laundering by wealthy clients. Bloomberg Sally Bakewell is here to discuss. When you’re taking a look at what has been reported around this probe, how do you think it’s going to ultimately be impacting Morgan Stanley, which is days away from its next earnings report? So what was quite surprising and actually continues to be surprising, is the share price drop, because to some extent, some of this probe was already known. We have known since November that the Federal Reserve was scrutinising whether the bank took adequate steps to prevent potential money laundering by clients outside the US. And then we learned just yesterday that this, this probe was actually a lot wider and that the SEC, the OCC and some offices of the Treasury are also digging into whether Morgan Stanley investigated some of its risky clients to a sufficient degree. So it does come at an awkward time because of course Morgan Stanley reports earnings next week and a lot of attention will already be on its wealth management division because some of it sort of flows have come under scrutiny for last quarter. It was a second quarter where net new inflows, net new assets were actually less than 50 billion. And executives actually pointed to the fact that they may have sort of lower margins in its wealth business that stick around. So there’s a financial issue and then there’s a regulatory issue. Would this cloud the picture from Morgan Stanley You think about its two day decline and it has been as much as 7%. It’s a little bit less than that right now, but it is the only Bank of the big six banks that before earnings was down on the year. Are there concerns about just the path forward for Morgan Stanley as a unit here when it comes to the wealth business relative to the whole business? Well indeed, I mean the the wealth business also in February had to well it made steps to eliminate about several 100 jobs which actually only counted for about 1% of the sort of total 40,000 employees there. But I think, you know, regards this probe, these probes, there’s still a lot we don’t know. We don’t really know the heft or the gravity. Attached to them, we don’t know what the consequences might be. We also don’t really know what period they pertain to. Although according to the Wall Street Journal, which first reported the news, the OCC did send the bank a formal warning last year, a so-called matter requiring attention, requiring it to address certain issues. And we also know that the SEC had sent Morgan Stanley a list of clients with questions about whether they were adequately vetted. So I think, you know, this is a bit of a cloud in general for the wealth division, which James Gorman. Prior to stepping down as CEO to be replaced by Ted, Pick had really built up into sort of the crown jewel of Morgan Stanley.
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