A former trader whose alleged bogus swap transactions cost Morgan Stanley more than $24 million has been barred from the investment industry for three years by the SEC.

Jennifer Kim, a 31-year-old Canadian citizen and Brooklyn, N.Y., resident, is also required to pay a $25,000 civil penalty to the U.S. Treasury in three installments over the next 180 days.

The SEC announced the consent agreement, under which Kim, a former Morgan Stanley & Co Inc., employee in New York City, neither denied nor admitted to the allegations against her, but agreed to the terms of the sanctions.

The SEC alleged that Kim, working with Larry Feinblum, another Morgan Stanley trader and supervisor on the firm's swaps desk, executed transactions in 2009 that took on more risk than was allowed by the firm. The pair then took steps to cover up the size of their risk positions from their supervisors, but were eventually caught by the company after losing millions, the SEC alleged.

As a result of the two traders bogus equity swap deals, Morgan Stanley lost an estimated  $24.7 million, the SEC said.

The two were also accused of submitting swap orders into the firm's risk management system that they never planned on executing and which they then promptly canceled.

The SEC claims that Kim and Feinblum set up their arbitrage trading strategy at positions that exceeded Morgan Stanley's risk limits, and then submitted orders that were designed to make it appear they were staying within Morgan Stanley's risk limits.

The scheme was uncovered in December 2009, when Feinblum's trade book recorded a $7 million loss, according to the SEC.  He then admitted that he and Kim had gone beyond the risk limits on repeated occasions and that they hid their misconduct, according to the SEC.

Feinblum and Kim were fired by Morgan Stanley in January.

The SEC in June fined Feinblum $150,000 and barred him from the securities industry for two years.

-Jim McConville