A former Morgan Stanley executive was charged with bribery Wednesday in a Securities and Exchange Commission civil complaint that says he steered nearly $2 million to himself, a lawyer and a Chinese official.
Garth R. Peterson, a managing director in the firm's real estate investment and fund advisory business until he was fired in 2008, was charged with violating the Foreign Corrupt Practices Act and securities laws for investment advisors.
Peterson disguised payments of at least $1.8 million as finder's fees owned by Morgan Stanley funds in China, the SEC said. The money actually went into his own pocket and to the unnamed chairman of a state-owned Chinese company called Yongye Enterprise Co., according to the SEC. Peterson also arranged for a Morgan Stanley fund to sell a valuable piece of Shangai real estate to himself, the unnamed Yongye official and an unnamed Canadian attorney, the SEC said, without telling Morgan Stanley he was on both the buyer and seller side of the deal.
Peterson joined Morgan in 2002, according to the complaint, filed in U.S. District Court in the Eastern District of New York, and is alleged to have engaged in the bribery from around 2004 to 2007. Morgan Stanley wasn't implicated in Peterson's alleged scheme, the SEC said. The SEC said it sent Peterson 35 "compliance reminders," which he ignored. Morgan Stanley fired Peterson for Foreign Corrupt Practices Act violations in 2008, according to the SEC.
Morgan Stanley did not immediately return a request for comment.
Peterson has already settled the SEC charges, agreeing to pay $250,000 and to relinquish his financial interest in the Shanghai real estate. The Department of Justice has also filed a criminal case against Peterson, according to the SEC.
The bribery charge comes as Walmart battles allegations that its own company executives engaged in widespread bribery of local officials in Mexico. On Wednesday, a Walmart shareholder sued the company's board of directors and several officers over the bribery allegations. At the same time, two U.S. congressman reportedly investigating the Walmart scandal have said that they plan to probe the extent to which the retail giant lobbied for changes to the Foreign Corrupt Practices Act.