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Former Morgan Stanley Broker Fined and Suspended for Discretionary Trade Violations

Debra Kaye Lyman, a former registered representative with the Holladay, Utah branch of Morgan Stanley, submitted a letter of acceptance, waiver, and consent in which she consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that she entered discretionary trades in several customers’ accounts without the necessary prior written customer authorization.

FINRA found that Debra Lyman, of West Jordan, Utah, neglected to obtain the necessary written customer authorization or the acceptance by her firm of the accounts as discretionary when she effected discretionary trades in at least six customers’ accounts. According to FINRA, Debra Lyman had been previously reprimanded and suspended by Morgan Stanley for engaging in similar broker misconduct. Further, Ms. Lyman allegedly misrepresented on a Firm Employee Sales Questionnaire that she had not transacted business on a discretionary basis for any accounts.

NASD Conduct Rule 2510(b) prohibits registered representatives from the use of discretionary power in customer accounts unless they have been given prior written authorization and the member firm has provided prior written acceptance of the account as being discretionary.

Debra Lyman was assessed a deferred fine of $10,000 and was suspended from association with any FINRA member in any capacity for three months. The suspension is in effect from March 2, 2015 through June 1, 2015.

Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of misconduct which are in violation of industry rules and procedures. In order to protect customers from this misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of the rules requires that supervisors monitor firm employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for losses flowing from the employees’ misconduct. As a result, account holders who have suffered losses stemming from unauthorized transactions by their broker or registered representative can bring forth claims to recover damages against broker-dealers like Morgan Stanley, which have a duty to supervise its employees in order to prevent broker misconduct.

Have you suffered losses in your Morgan Stanley investment account due to your stockbroker’s unauthorized trades or other misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Morgan Stanley stockbrokers for unauthorized and prohibited misconduct.

The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 33 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at pearce@rwpearce.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.