BROWSE BY TOPIC
- Investments - Private
- Investor Protection
- Investments - Unsuitable
- Compliance Concepts
- Investments - Strategies
- Regulatory Sanctions
- Rules & Regulations
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Wall Street News
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Investments - Unsuitable
Broker Double-Dips into Customers’ Accounts
[Seinfeld 'Double Dip' Episode featuring George Costanza / YouTube Screen Grab]
by Howard Haykin
A broker with Morgan Stanley cheated 8 customers out of $58,000 by double-dipping into their brokerage and fee-based accounts. Between January 2014 and December 2016, the broker recommended that his customers purchase 28 municipal bonds and 15 non-municipal securities in their brokerage accounts, where upfront sales commissions were charged. Within 90 days of each trade, the broker transferred the securities to the customers’ existing fee-based accounts.
DOUBLE DIPPING. The upfront sales commissions associated with the 43 purchases cost the customers a total of $58,000. Had these recommended purchases been made in the fee-based accounts there would have been no sales charges - because the customers were already paying annual fees of perhaps 1% or 2%. So, by collecting an ill-gotten brokerage commission on top of Morgan Stanley's annual advisory fee, the broker essentially double charged his customers for the services provided by Morgan Stanley and himself.
Upon learning of the double-dipping, Morgan Stanley terminated the broker. FINRA followed up by suspending him and hitting him with $29,000 in fines and disgorged commissions.
KEEP IT SIMPLE; KNOW YOUR CUSTOMER RIGHTS. A single account for each beneficiary is usually all that most customers need. Should a broker suggest more than one account, don't do anything until you get a clear and unambiguous explanation for the purpose of each account, along with an explanation as to how the multiple accounts will interact with each other. If unsure what to do, get another opinion from a trusted independent source – a friend, a family member or a Financial Watchdog. Keep It Simple; Ask Questions; Understand Your Customer Rights.
[For further details, click on … FINRA Case #2018057097301.]