SEC Goes After Former Morgan Stanley Exec

     BROOKLYN (CN) – A former Morgan Stanley executive secretly acquired millions of dollars of real estate investments for himself and an influential Chinese official, who steered business to Morgan Stanley, the SEC claims in Federal Court.



     The SEC accused Garth Ronald Peterson of violating the Foreign Corrupt Practices Act and other laws.
     In its 17-page complaint, it claims that Peterson broke the law while he worked at Morgan Stanley from 2004 to 2007, during which time he “secretly acquired millions of dollars worth of real estate investments from Morgan Stanley’s funds for himself, the former Chairman of Yongye Enterprise (Group) Co. (‘Yongye’) – a Chinese state-owned entity with influence over the success of Morgan Stanley’s real estate business in Shanghai – and others. Peterson also arranged to have paid to himself and the former Chairman of Yongye (‘the Chinese Official’) at least $1.8 million in what he misrepresented were finder’s fees Morgan Stanley’s funds owed to third parties. In exchange for offers and payments from Peterson, the Chinese Official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. This self-dealing and misappropriation by Peterson breached the fiduciary duties he and Morgan Stanley owed to their clients.”
     The SEC seeks disgorgement, penalties and an injunction against Peterson.
     According to the complaint: “Defendant Garth Peterson is a U.S. citizen and resident of Singapore who speaks Chinese fluently. Peterson began working for Morgan Stanley in 2002 in Hong Kong. He was made the head of the Shanghai office of Morgan Stanley’s wholly owned global real estate business when that office first opened in 2006 and became a Managing Director of Morgan Stanley in 2007. Peterson’s principal responsibility at Morgan Stanley was to evaluate, negotiate, acquire, manage and sell real estate investments on behalf of Morgan Stanley’s advisers and funds. As such, he owed a fiduciary duty to the fund clients. By the time he was terminated in 2008 in connection with the conduct described in this Complaint, Peterson had been involved with at least twenty-eight Morgan Stanley transactions in China.”
     The SEC accuses him of violating the Foreign Corrupt Practices Act, the Securities Exchange Act and the Investment Advisers Act.

%d bloggers like this: