Articles Tagged with Morgan Stanley

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Mathew M. Serth, of Stone Ridge, Virginia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly placing unauthorized trades in customers’ accounts without their knowledge or consent.

FINRA investigators found that while registered with Morgan Stanley, Mr. Serth entered trade orders in four accounts.  The net costs of the transactions ranged from $15,000 to $86,000.  However, FINRA stated that none of these customers granted Mr. Serth discretionary trading authorization to trade in their accounts.  Upon discovering the unauthorized trades, Mr. Serth’s member firm cancelled the trades and reimbursed a customer for margin interest incurred as a result of the unauthorized trades.  Without admitting or denying FINRA’s findings, Mr. Serth was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for three months.  The suspension is in effect from August 7, 2017 through November 6, 2017. Continue reading →

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Kim Dee Isaacson, a former registered representative with Morgan Stanley, submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he consented to, but did not admit to or deny, FINRA’s findings that he knowingly misrepresented his customer’s account value by more than $3.1 million and willfully executed trades in his customer’s accounts despite express orders not to do so.

During the relevant period, Kim Dee Isaacson, of Farmington, Utah, earned nearly $400,000 in commissions and fees from his customer’s accounts, which were valued at approximately $27 million.  Although Mr. Isaacson and his client spoke on the phone nearly every day regarding the accounts’ performance, Mr. Isaacson began providing false and inflated account values to hide the accounts’ losses.  According to FINRA, Mr. Isaacson’s customer believed his accounts held $3.1 million more than their actual value because of his misrepresented account valuations.  Further, FINRA found that Mr. Isaacson continued to purchase securities and long-term bonds despite his customer’s instructions not to do so.  FINRA also found that Mr. Isaacson engaged in unauthorized trading in the accounts, effecting approximately 360 transactions without consent.  Consequently, Kim Dee Isaacson was permanently barred from association with any FINRA member in any capacity.  Continue reading →

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The Financial Industry Regulatory Authority (FINRA) announced today that it ordered Morgan Stanley Smith Barney LLC (Morgan Stanley) to pay $13 million in fines and restitution for failing to supervise the sales of unit investment trusts (UITs).

FINRA found that from January 2012 through June 2015, hundreds of Morgan Stanley brokers executed short-term UIT rollovers in thousands of customer accounts.  Further, FINRA found that Morgan Stanley failed to adequately supervise its representatives’ sales by failing to provide sufficient guidance or training to detect unsuitable short-term UIT trading.  Continue reading →

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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.  Continue reading →

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Debra J. Ferrara, a non-registered associate employed by New York NY-based Morgan Stanley Smith Barney (Morgan Stanley), submitted a letter of Acceptance, Waiver, and Consent (AWC) in which she consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that she falsely represented that she had verbally confirmed five wire transfers totaling $108,680 which turned out to be fraudulent requests from a customer’s hacked email account.

Debra Jean Ferrara, of Old Bridge, New Jersey, allegedly caused five fraudulent wire disbursements to be transferred from a customer’s account to a third-party bank.  According to FINRA, Ms. Ferrara, a client services associate with Morgan Stanley, was sent an email with a request for a wire transfer of $27,750 from the hacked account of a client to a third party account.  Ms. Ferrara completed the wire processing form stating falsely that she had verbally confirmed the transfer request when she had not.  FINRA found that two days following the first hacked account wire request, Ms. Ferrara received another email from the imposter from an email that looked similar, but was different.  The “m” in the email address had been changed to an “n” this time.  Again, Ms. Ferrara processed the wire transfer requests, falsely attesting to verbally confirming the request when she had not. Continue reading →

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Byron A. Echeverria, a General Securities Representative formerly employed with the Houston, Texas 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 described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he falsified customer account documents without the customers’ knowledge.

FINRA’s findings state that Byron A. Echeverria, of Katy, Texas, falsified ten documents related to ten customer accounts. Some of the falsified documents included disclosure forms, transfer forms and IRA distribution forms. Mr. Echeverria allegedly re-used original customer signatures from previously executed documents, recycled customers’ signed signature pages from expired forms, affixed customer initials to handwritten changes, and altered tax withholding amounts in order to expedite transactions. None of the customers were aware of the altered forms or that their signatures had been affixed by Mr. Echeverria. Continue reading →

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Former Morgan Stanley Smith Barney (Morgan Stanley) and UBS Financial Services, Inc. (UBS) broker John Anthony Waszolek, of Scottsdale, Arizona, submitted an Offer of Settlement in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he took unfair financial advantage of an 81-year-old customer who had twice been diagnosed with Alzheimer’s disease and suffered from dementia and memory loss.

According to FINRA, John Waszolek (Waszolek) was informed by an estate planning attorney that she would not amend the elderly client’s trust to make Waszolek a beneficiary because it had been determined that the client lacked sufficient testamentary capacity. However, through a separate attorney, Maszolek gained appointment as successor trustee and residual beneficiary of the client’s trust. Upon the elderly client’s death, FINRA found that Waszolek attempted to inherit more than $1.8 million from the estate. Continue reading →

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Ronald Cohen of Boca Raton, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in outside business activities without providing prior written notice to his firm.

Cohen entered the securities industry in July 1992. Between 2009 through September 2014, Cohen was a General Securities Representative with Morgan Stanley. Cohen voluntarily left Morgan Stanley in September 2014 while under investigation for failing to disclose outside business arrangements. Continue reading →

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Morgan Stanley & Co. and Morgan Stanley Smith Barney LLC of New York submitted a Letter of Acceptance, Waiver and Consent to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to supervise and implement adequate written procedures to comply with Municipal Securities Rulemaking Board (MSRB) rules relating to short positions in tax-exempt municipal bonds.

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Sylvester King Kr. of Miramar, Florida submitted a Letter of Acceptance Waiver (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly concealing loans to customers participating in undisclosed private securities transactions and providing false information to his employer.

In 2009 King and his partner formed PKG, a d/b/a branch office located in Fort Lauderdale, Florida that was registered with Morgan Stanley and later Wells Fargo. PKG provided financial “concierge” services to professional athletes that played in the NFL and NBA. FINRA found that from November 14, 2011 through January 23, 2012, King assisted his partner in loaning approximately $399,500 to three professional athletes in the NFL and NBA who were also Wells Fargo customers. FINRA alleged that separate accounts were made and various wiring techniques were used to conceal the loans from Wells Fargo and its reporting requirements. Continue reading →