Overview

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933
Release No. 8532 / February 7, 2005

In the Matter of

MORGAN STANLEY & CO. INCORPORATED,

Respondents.

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ORDER UNDER RULE 602(e) OF THE SECURITIES ACT OF 1933 GRANTING A WAIVER OF THE DISQUALIFICATION PROVISION OF RULES 602(b)(4) AND 602(c)(2)

Morgan Stanley & Co. Incorporated has submitted a letter on behalf of itself and its affiliates, dated September 23, 2004, requesting a waiver of the disqualification from the exemption from registration under Regulation E arising from the settlement with the Commission of a civil injunctive proceeding.

On January 25, 2005, the Commission filed a civil injunctive complaint against Morgan Stanley & Co. Incorporated in the United States District Court for the District of Columbia alleging that Morgan Stanley & Co. Incorporated, violated Rule 101 of Regulation M under the Securities Exchange Act of 1934 ("Exchange Act").

Morgan Stanley & Co. Incorporated filed a "Consent of Defendant Morgan Stanley & Co. Incorporated" in which it agreed, without admitting or denying the allegations of the Commission's complaint, to the entry of a Final Judgment against it. Among other things, the Final Judgment permanently enjoins Morgan Stanley & Co. Incorporated from violating Rule 101 of Regulation M under the Exchange Act and orders Morgan Stanley & Co. Incorporated to pay a $40 million civil penalty.

Rule 602(b)(4) makes the Regulation E exemption unavailable to an issuer if, among other things, such issuer or any of its affiliates is subject to any "order, judgment, or decree of any court of competent jurisdiction, entered within five years prior to the filing of such [Regulation E] notification, temporarily or permanently restraining or enjoining such person from engaging in or continuing any conduct or practice in connection with the purchase or sale of securities." Rule 602(c)(2) also makes the exemption unavailable to an issuer if, among other things, any underwriter of the securities to be issued is "temporarily or permanently restrained or enjoined by any court from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or arising out of such person's conduct as an underwriter, broker, dealer or investment adviser." Rule 602(e) provides, however, that the disqualification "shall not apply . . . if the Commission determines, upon a showing of good cause, that it is not necessary under the circumstances that the exemption be denied."

Based on the representations set forth in Morgan Stanley & Co. Incorporated's September 23, 2004 request, the Commission has determined that, pursuant to Rule 602(e), a showing of good cause has been made and that it is not necessary under the circumstances that the exemption be denied.

Accordingly, IT IS ORDERED, pursuant to Rule 602(e) under the Securities Act, that a waiver of the disqualification provision of Rules 602(b)(4) and 602(c)(2) under the Securities Act of 1933 resulting from the entry of the Final Judgment is hereby granted.

By the Commission.

Jonathan G. Katz
Secretary

Details

Rule Type
Order Regarding Waiver
Feb. 7, 2005