Manipulated: Learning from case files

Morgan Stanley promised block-trade sellers confidentiality, yet, per SEC findings and a Statement of Facts the bank accepted as true, the head of its block desk and a second desk member told chosen hedge-fund clients what was coming, and those clients shorted the stock and covered with allocations from the same block. Morgan Stanley was not criminally charged and paid more than $249 million under a non-prosecution agreement and a settled SEC order; the desk head, Pawan Passi, had his one securities-fraud charge dismissed after a six-month deferred prosecution agreement and was never convicted.How Morgan Stanley's block desk tipped hedge funds before its clients' sales — a $249 million resolution, and no conviction for anyoneLegal status (as of 2026-10-25)Morgan Stanley & Co. LLC: not criminally charged. Three-year non-prosecution agreement from January 2024, running to about January 2027; it accepted responsibility for its employees' acts and accepted the Statement of Facts as true. Settled SEC order: censure and cease-and-desist.Pawan Passi: charged by information on January 12, 2024 with one count of securities fraud; pleaded not guilty; entered a six-month deferred prosecution agreement in which he agreed not to contest the described conduct. Prosecutors dropped the charge (nolle prosequi) and the case was terminated on July 25, 2024. Never convicted. Settled SEC order: cease-and-desist, $250,000 penalty (paid), and industry bars with the right to apply for reentry after 1 year (supervisory: 2 years).Employee-1 (unnamed in the record): no charge found in the public record.Buy-side investors (unnamed in the record): no public enforcement action found.Chapters0:00 Cold open1:06 The Promise3:18 The Playbook7:40 Eight Days In May12:02 Smells Fishy15:11 The Resolution18:01 The Aftermath19:18 What This Means For Surveillance