In a recent development, Morgan Stanley's wealth management arm is facing investigations from multiple regulators, according to sources familiar with the matter cited by the Wall Street Journal. The U.S. Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), and other Treasury Department offices are reportedly involved in the probe.

As a consequence of these investigations, Morgan Stanley's shares stumbled by 4.8% during late afternoon trading, reaching $87.17.

The regulators are primarily looking into whether the bank has adequately examined the identities of potential clients, the sources of their wealth, and how it monitors their financial activities. The investigations also extend to international clients, indicating a broad examination of the wealth management unit's operations.

Morgan Stanley has chosen not to comment on the ongoing investigations at this time. Meanwhile, spokespersons for the SEC, the OCC, and the Treasury have not responded to requests for official statements from Reuters.

Morgan Stanley's wealth management division serves affluent individuals and small to medium-sized businesses, offering a range of services such as brokerage, custody, investment advisory, and financial planning. This aspect of the bank's operations generates a more consistent income stream compared to investment banking, which is often tied to economic cycles. In fact, revenues from wealth management have contributed significantly to Morgan Stanley's market capitalization, surpassing that of its rival, Goldman Sachs.

The investigations into Morgan Stanley's wealth management arm come on the heels of the bank recently resolving a long-standing investigation into its block trading practices. Additionally, the bank has nominated former UK financial regulator Megan Butler to its board of directors.

It remains to be seen how these ongoing investigations will impact Morgan Stanley's wealth management operations and its overall standing in the financial industry.