Morgan Stanley

Bank of America, Deutsche Bank, Citigroup, & Other Big Banks Settle $1.87B Settlement Over Swaps Price-Fixing Case

Published on: September 12, 2015 | by Shepherd Smith Edwards & Kantas, LLP

$1.87B securities settlement has been reached with 12 major banks. The case resolves investor claims that the financial firms conspired to rig prices to hold back competition in the credit default market. For now, the resolution is an agreement in principal and the parties have two weeks to work out the details before turning the deal over to U.S. District Judge Denise Cote in Manhattan for preliminary approval.

The defendants in this credit default case are:

· Bank of America Corp. (BAC)

· UBS AG (UBS)

· Goldman Sachs Group Inc., (GS)

· Barclays (BARC)

· Royal Bank of Scotland Group Plc (RBS)

· BNP Paribas SA (BNP)

· Morgan Stanley (MS)

· Citigroup (C)

· JPMorgan Chase (JPM)

· Credit Suisse Group AG (CS)

· Deutsche Bank AG (DB)

· HSBC Holdings Plc (HSBC)

Markit Ltd and the International Swaps and Derivatives Association are also defendants.

FINRA Orders Morgan Stanley to Pay $2.4M Over Ex-Broker’s Trades, Bars Former Merrill Lynch Trader from the Industry

Published on: July 28, 2015 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority panel arbitration panel says that Morgan Stanley (MS) must pay at least $2.4M to settle the latest client claims accusing its former broker, Steven Mark Wyatt, of mishandling their investments. The brokerage firm fired Wyatt in 2012.

According to a group of doctors and their loved ones, Wyatt, who was their broker, made unauthorized and excessive trades in the stock market that cost them during and after the 2008 financial crisis. Wyatt bought thinly-traded stocks for the investors and placed speculative bets on exchange-traded funds and other securities in their portfolios.

This is the latest batch of claims against Wyatt, Morgan Stanley, and managers at the Mississippi branch where he worked. The claimants believe that Morgan Stanley failed to detect warning signs of Wyatt’s purported wrongdoing. Other employees named in this securities case are adviser Hilary Zimmerman, currently a Morgan Stanley senior vice president, and branch manager Fred Eugene Brister III. The claimants contend that Brister failed to properly supervise Zimmerman and Wyatt. They say that their accounts were mismanaged and suspect trading occurred.

Morgan Stanley and Scottrade to Pay FINRA $950K FINRA for Inadequate Supervision of Third Party, Customer Account Transfers

Published on: June 23, 2015 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority said that Morgan Stanley Smith Barney, LLC (MS) and Scottrade, Inc. will pay fines of $650K and $300K, respectively. The firms are settling claims accusing them of not putting into place supervisory systems that could reasonably monitor customer funds transmitted to third-party accounts. The self-regulatory organization cited both financial firms for having weak supervisory systems a few years back, but they purportedly did not take the necessary steps to remedy the deficiencies.

The SRO contends that from 10/08 to 6/13, three Morgan Stanley-registered representatives in two of the firm’s branch offices converted $494,000 from thirteen customers by setting up fraudulent wire transfer orders and branch checks from the clients’ accounts to third-party accounts. One example of such an instance involves representatives transferring funds from several customer accounts into their own bank accounts.

FINRA said that Morgan Stanley should have put into place systems and procedures that would have allowed it to review and monitor such transmissions. The regulator said that instead, the supervisory failures let the conversions occur without detection.

DOJ Prepares Mortgage Fraud Cases Against More Banks

Published on: June 6, 2015 | by Shepherd Smith Edwards & Kantas, LLP

According to the Wall Street Journal, the U.S. Department of Justice and state officials are readying more mortgage fraud cases against up to nine banks, with resolutions against Morgan Stanley (MS) and Goldman Sachs Group (GS) possibly finalized as early as later this month. Most negotiations are reportedly in the earlier stages and could go on for months.

The cases are over residential mortgage-backed securities that fell in value during the economic crisis. Individual securities cases are expected rather than a collective agreement. Other banks that are expected to settle include Credit Suisse Group AG (CS), Barclays PLC (BARC), HSBC Holdings PLC, Deutsche Bank AG (DB), UBS AG (UBS), Royal Bank of Scotland Group PLC (RBS), and Wells Fargo & Co. (WFC).Settlements could range in size from a few hundred million dollars to up to $3 billion depending on the extent of misconduct allegedly involved.

Also likely to be involved least some of the RMBS cases are the attorneys general of Illinois, Massachusetts, New York, and other states that also took part in the earlier rounds of RMBS fraud cases against banks.

Morgan Stanley to Pay $2M for Violations Involving Short Sales and Short Interest Reporting

Published on: May 19, 2015 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority is fining Morgan Stanley & Co. LLC (MS) $2M for violations involving short sale and short interest reporting rules. The violations purportedly took place over six years. The financial firm is also accused of not putting into place a supervisory system designed in a reasonable enough manner that it could identify and prevent such violations.

Financial firms are supposed to report to the SRO on a regular basis their total short positions involving equity securities in proprietary firm and customer accounts. However, according to the self-regulatory organization, Morgan Stanley did not accurately and completely report such positions in certain securities that involved billions of shares. FINRA also said that the firm’s supervisory system was deficient.

Meantime, under U.S. Securities and Exchange Commission’s Regulation SHO for regulating short sales, firms are supposed to aggregate their positions in a security to determine whether they are short or long. Through an aggregation unit, Regulation SHO lets firms track positions in a security separate from other positions at the firm and via certain trading desks or operations.

Morgan Stanley Sued by Home Shopping Founder’s Widow for $170M

Published on: April 27, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Lynnda L. Speer, the widow of Home Shopping Network co-founder Roy M. Speer, is suing Morgan Stanley Wealth Management (MS), a branch manager, and an adviser for over $170 million. Mrs. Speer contends that the firm and adviser Ami Forte took part in excessive trading, abused their fiduciary duty, and were involved in unauthorized use of discretion.

Now, she is seeking $78 million for Florida Statute violations, up to $66 million in portfolio damages, and up to $44 million for disgorgement and excess commission damages. Also named in the complaint submitted to the Financial Industry Regulatory Authority is Morgan Stanley branch manager Terry McCoy.

Reuters reports that Speer’s case accuses Morgan Stanley of not properly supervising its brokers and failing to act in the best interests of Mr. Speer. When Speer died in 2012 at the age of 80 his estimated worth was approximately $775 million.

Broker and Adviser News: Morgan Stanley Sues Ameriprise Broker, Former UBS Broker Alleges Investor Risk Levels Were Mischaracterized, and Ex-Bank of America Merrill Lynch Trainees Seek Overtime

Published on: March 5, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley Accuses Ex-Broker, Now With Ameriprise, of Trying to Take Clients

Morgan Stanley Wealth Management is suing one of its ex-brokers, John McCallion, who is now with Ameriprise Financial Services (AMP). The wirehouse claims that McCallion went into Morgan Stanley’s (MS) computer system before leaving the firm and changed his clients’ phone numbers so he could take their business with him.

The firm contends that while McCallion gave it a list of his clients’ information, he put the data on a USB drive that could not be opened on Morgan Stanley’s computers because of security issues. The Ameriprise broker has consented to a temporary restraining order that blocks him from pursuing the firm’s clients. He also is facing a FINRA arbitration claim over the matter. McCallion had at first tired to argue against the temporary order and he denied taking the confidential list or trade secrets.

Morgan Stanley, DOJ Arrive at $2.6B Mortgage Bond Settlement

Published on: February 25, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley (MS) has reached an agreement in principal with the U.S. Department of Justice to resolve claims related to its sale of mortgage bonds. The government probe looked into allegations that the financial firm misrepresented the quality of home loans that were packaged into bonds.

The broker-dealer, however, still needs to negotiate with the DOJ about other terms, including what would be included in a signed statement of facts. The settlement doesn’t resolve probes by state litigators.

Morgan Stanley’s financial agreement is much smaller than what other firms have paid when settling with the Justice Department. Citigroup Inc. (C) paid $7 billion, J.P. Morgan Chase & Co. (JPM) paid $13 billion, and Bank of America Corp. (BAC) paid $16.65 billion.

US Probing Whether Morgan Stanley Data Breach Was Linked to Fired Financial Adviser

Published on: February 18, 2015 | by Shepherd Smith Edwards & Kantas, LLP

A U.S investigation into the way Morgan Stanley (MS) information became available for sale online is looking at whether hackers targeted financial adviser Galen Marsh after he took information from the bank. Marsh was fired for taking data on up to 350,000 wealth management clients. His lawyer, however, maintains that Marsh did not try to use, sell, or publish the information for personal gain.

Now, federal investigators want to know whether there was a breach to Marsh’s computer after he took the information from Morgan Stanley, especially as there is no evidence that the firm’s own computers were hacked.

It was in December that the broker-dealer discovered that information about some 900 of its customers were published on Pastebin, which is a website. Potential buyers were asked if they would pay for more information and use a virtual currency. Morgan Stanley had the information removed from public view immediately and notified the authorities.

Morgan Stanley Fires Wealth Management Group Employee For Stealing Client Data

Published on: January 5, 2015 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley (MS) has let go of Galen Marsh, a 30-year-old financial adviser in its wealth management group, for stealing client information and allegedly making some of the data that he took available online. Some 350,000 of the brokerage firm’s 3.5 million wirehouse clients were affected. About 900 clients’ account names and numbers were briefly posted on the Internet.

Morgan Stanley discovered that Marsh had downloaded the client data, including account numbers, names, states of residence, and asset values. In a statement, the firm said that there is no proof of any financial loss sustained by the clients whose information was stolen. (Social security numbers and account passwords were not taken.)

The firm says it is notifying the clients who were affected. It has also reached out to regulators and law enforcement.