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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
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NEWSLETTERS & ALERTS
Morgan Stanley Won’t Always Have Your Back
by Howard Haykin
The Securities regulator for the Commonwealth of Massachusetts recently sanctioned Morgan Stanley for failing to supervise a Boston-based broker who was churning (i.e., excessively trading) his customers' accounts. The broker has since been banned from the industry, and Morgan Stanley agreed to reimburse the customers for their losses.
Morgan Stanley never formally investigated the broker, even though his unlawful behavior triggered 97 alerts, dating back to 2010. It was only after a customer’s accountant filed a complaint in 2014 that Morgan Stanley took a serious look into the charges.
The accountant discovered that ... the broker had been designated as the executor of the customer’s estate and as a beneficiary in the customer’s will – both designations were in violation of securities rules. And in violation of Morgan Stanley policies, the broker never disclosed those designations to the firm. Further investigation revealed the incidence of excessive trading.
INVESTOR TAKE AWAYS. A financial watchdog – here, an accountant – saved his client and others from a broker’s objectionable behavior. As we repeatedly stress on this web site, investors who are incapable or unable to fend for themselves need a trusted friend, family member or financial to serve as a second set of eyes and ears.
It takes a lifetime to build a personal fortune or nest egg. It takes a shady broker only months or years to run through that financial portfolio.