Published on:

Former Morgan Stanley Broker Suspended for Unsuitable UIT Recommendations

Richard Shotz, a registered representative formerly employed with Morgan Stanley, submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended for four months and fined $7,500 by the Financial Industry Regulatory Authority (FINRA) for engaging in unsuitable short-term trading of Unit Investment Trusts (UITs) in 486 customer accounts.

According to FINRA, Richard Alan Shotz, of Port Orange, Florida, recommended and engaged in unsuitable short-term trading of UITs.  The UITs recommended by Mr. Shotz had 24 month maturity dates and significant upfront charges.  Notwithstanding, Mr. Shotz continually recommended his customers sell their UITs less than a year after purchase (FINRA found an average holding period of only 143 days). Furthermore, on approximately 1200 occasions, FINRA found that Mr. Shotz recommended that his customers use the proceeds from the short-term sale of one UIT to purchase another UIT with similar and/or identical investment objectives.  These unsuitable recommendations and transactions caused his customers to incur unnecessary sales charges.  Without admitting or denying FINRA’s findings, Mr. Shotz was fined $7,500 and suspended for four months.  The suspension is in effect from February 20, 2018 through June 19, 2018.

Stockbrokers have been known to engage in many types of practices that may be in violation of industry and firm rules, practices, and procedures.  In order to protect investors from these types of stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system.  The implementation of these rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and 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 liable to investors for damages which flow from the misconduct. Therefore, investors who have suffered losses stemming from unsuitable recommendations, unsuitable trades and/or other misconduct by their broker can bring forth claims to recover damages against broker-dealers, like Morgan Stanley, which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.

Have you suffered losses in your Morgan Stanley account due to unsuitable recommendations, unsuitable short-term UIT trades and/or unnecessary sales charges by your broker?  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 who may have engaged in broker misconduct and caused investors’ losses.

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 visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.