SEC Probes Barclays, Morgan Stanley Bankers Over Puerto Rico

By Martin Z. Braun, Bloomberg News

The U.S. Securities and Exchange Commission may take action against bankers from Barclays Plc and Morgan Stanley for their roles in Puerto Rico bond sales before a worsening fiscal crisis sent it hurtling toward bankruptcy.

The SEC’s staff made a preliminary recommendation that the agency file an enforcement action against Barclays’ Luis Alfaro and James Henn for alleged violation of fair dealing rules for their roles in the island’s debt sales, according to brokerage records filed with the Financial Industry Regulatory Authority.

The staff also made an initial determination in favor of sanctioning Morgan ...