The bank failed to detect “hundreds” of instances when brokers misappropriated client funds through unauthorized Automated Clearing House transfers, the SEC said.

Morgan Stanley Smith Barney will pay a $15 million penalty as part of a settlement with the Securities and Exchange Commission related to four financial advisers who stole millions of dollars of advisory clients’ and brokerage customers’ funds.

The U.S. Securities and Exchange Commission said that Morgan Stanley failed to detect hundreds of unauthorized transfers that occurred between May 2015 and July 2022 and to “reasonably supervise” its employees.

Morgan Stanley Smith Barney was charged Monday with failing to reasonably supervise four of its advisors - Michael Carter, Chingyuan “Gary” Chang, Douglas McKelvey, and Jesus Rodriguez - who misappropriated almost $10 million in client funds through unauthorized wire transfers and automated clearing house payments.

A lack of supervision and internal controls at Morgan Stanley Smith Barney allowed four of its investment advisers to steal millions from customers before the behavior was detected, the SEC said in charging the firm.