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Morgan Stanley Faces Gas Price-Gouging Probe

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Bloomberg News

The Tampa Tribune

Published: December 10, 2008

Morgan Stanley and its gasoline distributor TransMontaigne Inc. are under investigation in Florida for price gouging during Hurricane Ike, state law enforcers said.

Florida received thousands of complaints of gasoline stations charging inflated prices after a state of emergency was declared as the storm approached in September, Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson said in a statement Tuesday.

After making landfall in Cuba as a Category 3 storm, Ike traveled west toward southern Florida but didn't hit the state.

McCollum and Bronson said a review of invoices in a gouging investigation of McKenzie Oil Co., a retailer in Tallahassee, showed its prices were a result of wholesale charges paid to TransMontaigne. New York-based Morgan Stanley set the prices for TransMontaigne, the officials said.

Once the second-largest U.S. securities firm, Morgan Stanley converted to a bank holding company in September.

The investigation will continue to determine exactly what led to the extraordinary increases in the price of gasoline, McCollum said in the statement.

Gov. Charlie Crist's declaration of an emergency meant that retailers, including sellers of storm-protection supplies and food, were prohibited from implementing large increases in prices that can't be explained, said Sandi Copes, a spokeswoman for the attorney general.

Morgan Stanley's TransMontaigne unit supplied wholesale gasoline to stations throughout Florida, the statement said.

"We deny that we engaged in any price gouging and we are fully cooperating in any investigation," Jennifer Sala, a spokeswoman for Morgan Stanley, said in an interview.

The civil penalty for price gouging in Florida is a $1,000 fine for each violation, to a maximum of $25,000 for multiple violations in one day. In 2005 and 2006, after four hurricanes, the Agriculture and Consumer Services Department fined 16 gasoline stations more than $65,000.

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