Ex-Morgan Stanley China Property Head Under SEC Probe

The former China head of Morgan Stanley Real Estate has been under an investigation by the U.S. Securities and Exchange Commission for suspected violations of the Foreign Corrupt Practices Act (FCPA), said three sources with knowledge of the matter.

The FCPA is a U.S. securities statute related to bribery and Garth Peterson, who sources said was fired by Morgan Stanley in December 2008, is the target of the SEC investigation.

The U.S. securities watchdog believes Peterson violated the FCPA rules to make several property deals for the bank in China, the sources said.

Peterson, a managing director of Morgan Stanley Real Estate, was based in Shanghai, China's financial hub.

On Feb 11, Morgan Stanley said in a filing to the SEC that it fired a China-based employee who had initiated actions that "appear to have violated the Foreign Corrupt Practices Act."

The Wall Street bank also said in its filing to the SEC that it reported the employee, based at "an overseas real estate subsidiary," to authorities, and is continuing an investigation.

Peterson did not respond to repeated calls to his China mobile phone.

A Morgan Stanley spokeswoman, when contacted by Reuters, did not provide any further details beyond the filing and  declined to identify the former employee involved.

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