Morgan Stanley has agreed to pay a $2 million fine to settle allegations that it failed to adequately monitor whether stock sales by a former top executive of First Republic Bank were based on insider information, the Massachusetts securities regulator said on Friday. The penalty stems from stock sales made shortly before the collapse of the California regional bank.

Here is the translated heading in English:

"Although the affected manager's name is not mentioned in the comparison, the described sales match those of James Herbert II, the founder and former CEO of First Republic. Herbert sold shares worth over $6.8 million in February and March 2023, just before the bank's stock price plummeted. First Republic eventually collapsed, and the bank was sold to JPMorgan Chase in a deal brokered by the Federal Deposit Insurance Commission (FDIC).

Herbert and other executives of First Republic sold shares worth more than $10 million in the first months of 2023. These sales are also the subject of a class-action lawsuit that alleges insider trading among the accusations against the executives.

Morgan Stanley was accused of overlooking several warning signs that should have triggered a closer scrutiny of stock sales. According to the settlement, the company's fraud detection team lacked the necessary skills to conduct simple internet searches, which hindered oversight. Morgan Stanley did not admit any wrongdoing, but agreed to improve its monitoring practices.

The case marks the first major settlement with a regulatory authority regarding the turmoil in the regional banking sector last year, which led to the collapse of several banks and significant losses for the FDIC fund.