Morgan Stanley Capital Group agreed to pay $2.3 million to settle accusations that a gasoline supplier it owns gouged consumers last fall during Hurricane Ike, Florida officials announced. The settlement is the largest in Florida history and might be the largest ever, they said.
Typically, small retailers are the ones caught in gouging investigations, which are common in Florida following natural disasters, particularly hurricanes. Florida has tough anti-gouging rules that prevent prices for staples such as fuel or supplies from being increased during a declared emergency.
But in the midst of Hurricane Ike in September, Florida officials said gas prices shot up by $1.60 a gallon within 24 hours. Thousands of consumers complained and in a highly unusual move applauded by retailers, offciials went after Morgan Stanley and its subsidiary, TransMontaigne Product Services, a wholesaler and distributor of Morgan Stanley owned gasoline.
"Price gouging victimizes people already dealing with a disaster, and big business needs to be held accountable for any involvement in this behavior," Florida Attorney General Bill McCollum said in a statement. "I appreciate Morgan Stanley's efforts to resolve this matter and set a high standard for the rest of the fuel suppliers in the state."
Morgan Stanley issued a terse comment following the settlement: "We are pleased to have resolved this issue with the State of Florida."
Investigators from the Attorney General's office and the Department of Agriculture and Consumer Services determined most retailers were only passing on price hikes imposed by TransMontaigne. They served subpoenas on the company and then accused the company of price gouging -- which it denied and continues to deny in the settlement.
Under an Assurance of Voluntary Compliance, Morgan Stanley and TransMontaigne agreed to pay $650,000 in "unjust enrichment," $125,000 (the maximum $25,000 civil penalty for each of the five days of alleged gouging), $1 million to cover the state's investigative and legal costs and $500,000 for future consumer protection activities.
The companies also promised to abide by anti-gouging laws in the future.
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