Subscribe to our mailing list

* indicates required







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.




Investor Protection

Morgan Stanley Broker Crosses Signals with Customer

July 29, 2020

by Howard Haykin



‘Putting the cart ahead of the horse’ is an idiom or proverb used to suggest something is done contrary to a conventional order or relationship. A cart is a vehicle which is ordinarily pulled by a horse, so to put the cart before the horse is an analogy for doing things in the wrong order.



During an in-person meeting, a Morgan Stanley broker spoke with his customer about transferring additional accounts to Morgan Stanley; the customer already had several accounts with that broker. Before concluding the meeting, the broker had the customer sign a blank ACAT form. [An ‘Automated Customer Account Transfer’ form is used to move securities from one brokerage firm to another.] Two months later, they renewed the discussion, this time regarding a specific brokerage account with a value in excess of $1 million. The customer provided the broker with account statements for him to attach to the already signed ACAT form.


The next day, believing the customer had authorized him to transfer the account, the broker completed the blank ACAT form and submitted it for processing. However, later that day, the customer emailed the broker directing him not to transfer the account to Morgan Stanley. By the time the broker responded the following business day, the transfer had already been processed. The customer disputed the transfer, though he subsequently withdrew the complaint.


Nevertheless, Morgan Stanley terminated the broker, citing the broker for ... 
  • re-using previously signed account transfer forms;
  • adding information onto previously signed forms to initiate the transfer of some of client's accounts to the Firm; and,
  • failing to escalate client's concerns regarding the transfers. 



FOR THE SAFETY OF ALL CONCERNED.    Perhaps it simply was a matter of crossed or mixed signals between the broker and customer. In any case, the broker committed several lapses in judgment. By taking an expedient and careless route toward processing the transfer – i.e., by putting the cart ahead of the horse - this episode ended badly for all parties involved. There's a reason and a logic to following the assigned order of business. 



[For further details, click on … FINRA Case #2019063042701.]