The second-biggest U.S. securities firm will pay a $50 million penalty to settle charges that it unfairly steered investors to certain mutual funds in exchange for payments by those funds.

Under the agreement with the Securities and Exchange Commission, Morgan Stanley does not admit or deny breaking the law. The SEC's announcement Monday said Morgan Stanley will change its sales practices to make fees and possible conflicts of interest clearer to investors.

The money from the penalty is to be returned to investors.

The SEC says the case stems from the government's continuing industry-wide investigation of mutual fund sales practices.