Richard Garaventa, ex-vice president of Morgan Stanley has been arrested and charged in the US with using his authority to embezzle more than $2.5 million (£1.7 million) from the firm.

He has pleaded not guilty to charges including grand larceny in New York, the Associated Press reports.

Federal prosecutors accuse him of misappropriating funds using his position to request cheques from one of Morgan Stanley's in-house accounts to cover lavish expenses.

Between 5 September 2001 and 24 December 2008, the former executive is alleged to have signed off on the release of more than $2.5 million, which he used to purchase jewellery, holidays and Mercedes and Lexus cars.

Mr Garaventa is also accused of using illegally-obtained company funds to renovate his New Jersey residence.

He will be held on $1 million bail until another hearing on 4 March.

A spokesman for Morgan Stanley told WealthBriefing: "The alleged conduct by a former rogue employee is in direct violation of the firm's values and policies. We reported this matter to the authorities and have provided every assistance to their investigation."

If convicted, Mr Garaventa could face up to 25 years in prison, the news service noted.