In the Matter of William Keith Phillips
On January 4, the Commission announced the settlement of the matter instituted against William Keith Phillips on July 20, 2009. Pursuant to the settlement, the Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act and Section 15(b) of the Securities Exchange Act of 1934 against William Keith Phillips. On July 20, 2009, the Commission instituted and settled proceedings against Morgan Stanley & Co. Incorporated, Rel. 34-60342.
The Order finds that from 2000 through 2006, Phillips worked as a financial adviser at Morgan Stanley, which provided investment advisory services to clients through its Consulting Services Group. During the relevant time period, Morgan Stanley's disclosure materials described the advisory services it provided which included assisting clients in identifying money managers to manage clients' assets. Morgan Stanley disclosed the detailed due diligence process it followed to select and approve money managers for participation in the firm's managed account program. According to its disclosure materials, Morgan Stanley financial advisers selected money managers from this approved list of managers to recommend to clients based on the client's investment profile and objectives.
The Commission finds that contrary to Morgan Stanley's disclosures, Phillips recommended to certain advisory clients, three money managers who were not approved for participation in Morgan Stanley's advisory programs and had not been subject to the firm's due diligence review. This fact was not disclosed to Phillips' clients. The Commission further finds that Phillips had undisclosed relationships with the unapproved money managers he recommended to his advisory clients and that he and Morgan Stanley received substantial brokerage commissions and/or fees from them. Thus, the Commission finds that Phillips made misrepresentations about the firm's money manager recommendation process to his clients and failed to ensure that the conflicts of interest inherent in his recommendations were disclosed to clients. Based on the above, the Commission finds that Phillips willfully aided and abetted and caused Morgan Stanley's violations of Section 206(2) of the Advisers Act.
Pursuant to the Order, the Commission ordered Phillips to cease and desist from committing or causing any violations and any future violations of Section 206(2) of the Advisers Act, is suspended from association with any investment adviser, broker, or dealer for four months, and must pay a civil monetary penalty in the amount of $80,000. Phillips consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rels. 34-61278; IA-2970; File No. 3-13559)
INVESTMENT COMPANY ACT RELEASES
MetLife, Inc., et al.
A notice has been issued giving interested persons until January 25, 2010, to request a hearing on an application filed by MetLife, Inc. (MetLife) and MetLife Capital Trust V (Trust) for an order under Section 6(c) of the Investment Company Act of 1940 (Act) for an exemption from all provisions of the Act. The order would permit the Trust to sell debt securities and non-voting preferred stock and use the proceeds to finance the business operations of MetLife or a controlled company of MetLife. The requested order would also apply to certain existing or future insurance companies, banks or their holding companies that are controlled by MetLife and that act as a parent company within the meaning of Rule 3a-5 under the Act and to their finance subsidiaries. (Rel. IC-29101 - December 30)
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