FILE PHOTO: The corporate logo of financial firm Morgan Stanley is pictured on a building in San Diego, California, U.S., September 24, 2013. REUTERS/Mike Blake/File Photo

WASHINGTON (Reuters) - Morgan Stanley MS.N agreed to pay a $3.6 million fine on Friday after regulators found it failed to have systems in place to help it detect and prevent the misappropriation of client funds, the U.S. Securities and Exchange Commission said.

Since 2009, Morgan Stanley has allowed brokers to initiate wire transfers of as much as $100,000 from a client’s brokerage account into a third-party account so long as the adviser reported on an internal digital form that the client had requested the transfer over the phone or in person.

The brokerage required some additional information and had policies in place allowing it to review some disbursement requests, the SEC said. But the regulator said the policies were insufficient in preventing one broker from misappropriating $5 million worth of clients’ money without their permission between December 2015 and November 2016.

Former Morgan Stanley broker Barry Connell was arrested in February 2017 and faces criminal charges in a federal court in New York related to the alleged misappropriations. His case is pending.

As part of the settlement, Morgan Stanley did not admit or deny the SEC’s findings.

Morgan Stanley spokeswoman Christine Jockle said the firm was happy to have reached the settlement.

“Morgan Stanley has strengthened and will continue to improve its controls against fraudulent conduct to ensure the safety of our clients’ assets,” Jockle said in an emailed statement.