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FINRA Fines and Suspends Former Morgan Stanley Broker for Discretionary Trade Violations

Tom Puentes, a former registered representative with the Langley, Washington branch of Morgan Stanley, submitted a Letter of Acceptance, Waiver, and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he entered discretionary trades in at least fourteen customer accounts without the necessary prior written authorization.

FINRA found that Tom Abel Puentes, of Langley, Washington, failed to obtain the necessary written authorization from his customers or his member firm when he exercised time and price discretion in the accounts of fourteen customers.  According to FINRA, Mr. Puentes exercised discretion to purchase municipal bonds on approximately 220 occasions in his customers’ accounts, in contravention of his firm’s policies.  Further, Mr. Puentes falsely answered “no” on his firm’s annual compliance questionnaire to the question asking if he had any accounts in which business is transacted on a discretionary basis. 

Municipal Securities Rulemaking Board (MSRB) Rule G-17 requires “in the conduct of its municipal securities or municipal advisory activities, each broker, dealer, municipal securities dealer, and municipal advisor shall deal fairly with all personas and shall not engage in any deceptive, dishonest, or unfair practice.”  For the discretionary violations described above, FINRA found Mr. Puentes to have violated MSRB Rule G-17.   Consequently, he was assessed a fine of $15,000 and suspended from association with any FINRA member in any capacity for thirty days.   The suspension was in effect from November 7, 2016 through December 6, 2016.

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 resulting from the employee or 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 stockbroker 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 35 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.