Morgan Stanley

Lloyds, Barclays, to Set Aside Hundreds of Millions of Dollars for Allegedly Mis-Selling to Victims

Published on: August 27, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Britain’s largest banks expected to set aside hundreds of millions of dollars to compensate customers that were the alleged victims of mis-selling. As of the end of July, the Big Four Banks reportedly had budgeted at least $20.2 billion (the figure was converted from pounds) to pay back clients that were mis-sold insurance policies. Lloyds Banking Group (LLOY) and Barclays (BCS) are among the institutions needing to pay such provisions.

According to the Financial Conduct Authority, in April and May both, banks across Britain paid just over $642.6 million in compensation. This is a significant jump from February, when they paid $625.7 million and in March when the amount as $573.75 million U.S. dollars.

Borrowers bought payment protection insurance (PPI) policies, which were supposed to guarantee that they could pay back loans if they were no longer able to work or became unemployed. That said, the policies were purportedly sold to customers that either would not have been able to avail of the coverage because they were either on benefits or self-employed or people that didn’t want to be covered.

Bank of America, JPMorgan Chase Among Banks Sued by Danish Pension Funds in Credit Default Swaps Lawsuit

Published on: August 15, 2013 | by Shepherd Smith Edwards & Kantas, LLP

In U.S. District Court for the Northern District of Illinois, Danish pension funds (and their investment manager) Unipension Fondsmaeglerselskab, MP Pension-Pensionskassen for Magistre & Psykologer, Arkitekternes Pensionskasse, and Pensionskassen for Jordbrugsakademikere & Dyrlaeger are suing 12 banks accusing them of conspiring to take charge of access and pricing in the credit derivatives markets. They are claiming antitrust violations while contending that the defendants acted unreasonably to hold back competitors in the credit default swaps market.

The funds believe that the harm suffered by investors as a result was “tens of billions of dollars” worth. They want monetary damages and injunctive relief.

According to the Danish pension funds’ credit default swaps case, the defendants inflated profits by taking control of intellectual property rights in the CDS market, blocking would-be exchanges’ entry, and limiting client access to credit-default-swaps prices, and

Morgan Stanley to Pay New Jersey Regulators $100K for Selling Exotic ETFs to Investors, Including Seniors

Published on: July 30, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley will pay $100,000 to the New Jersey Bureau of Securities for allegedly selling exotic exchange-traded funds to investors. The state’s regulators say that the firm’s financial advisers were not properly trained and sold inverse and leveraged ETFs to senior investors that wanted to earn additional income. These clients instead would go on to sustain losses. A state official contends that the financial firm did not properly supervise staff that was dealing with ETF transactions.

Commenting on the securities settlement, Morgan Stanley said it was “pleased’ to have arrived at a resolution and that since the period in question-1/07 to 6/09, the brokerage firm has overhauled its process involving these products. The amount includes $65K in civil penalties, $25K to pay the state back for its investigative expenses, and $10,000 toward investor education. Already, the broker-dealer has paid $96,940 in restitution to investor in New Jersey.

Last year, Morgan Stanley consented to pay close to $2.4 million to settle Financial Industry Regulatory allegations over the firm’s handling of ETFs. According to the SRO, from 1/08 to 1/0, the firm did not set up or maintain a supervisory system and written procedures to ensure compliance with FINRA and NASD rules related to the sale of inverse, leveraged, and inverse leveraged ETFs.

Financial Firms Update: Morgan Stanley Now Owns Smith Barney, Wells Fargo & JPMorgan Defeat Estimates, MLB All-Star Sues UBS for $7.6M, & Ray Lucia, His Firm Fined Over “Buckets of Money” Strategy

Published on: July 12, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley Buys Smith Barney from Citigroup

Morgan Stanley (MS) now owns Smith Barney, which it just bought from Citigroup (C) for $9.4 billion. Smith Barney’s new name is Morgan Stanley Wealth Management. Based on its new number of financial advisers, the deal makes Morgan Stanley the largest Wall Street firm and comes in the wake of Federal Reserve approval.

Wells Fargo & JPMorgan Defeat Analysts’ Estimates

Morgan Stanley Unveils Trade Flow Insights Product to Give Brokers Better Sales Data

Published on: May 30, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Morgan Stanley (MS) has a new trade tool to help brokers better understand who is buying and selling what financial products. Trade Flow Insights was recently rolled out to over 16,000 financial advisers.

The tool provides information on leading sales and purchases that have been executed, in addition to asset allocation. Advisers can even filter data to determine which products were the most popular in the last week or month. Client age, asset class, and household assets are just some of the filter categories.

Not only will Trade Flow Insights let representatives know what products are most in demand, but also it will inform them of which financial instruments their coworkers are most successful with. Some brokers are saying that having this type of insight is beneficial, helping them become aware of current trends while causing them to probe more deeply into the investment options out there before making a buy for an investor.

Morgan Stanley Hit with $5 Million Securities Fraud Lawsuit Involving Alleged Superannual Account Losses Related to Risky Option Trading

Published on: May 18, 2013 | by Shepherd Smith Edwards & Kantas, LLP

In Australia, two Morgan Stanley (MS) customers are suing the financial firm for $5 million because they say that is much their superannual accounts lost because of alleged misrepresentations made by broker Kate Kearney. Helen Sedman, 74, and Sally Middleton, 61, claim that Kearney deceived them into thinking that an option trade that they made was low risk.

Middleton and Sedman are business partners. They believe that because of the high-risk option trade and fees they had to pay, over 97% of Middleton’s account was wiped out (from $1.2 million to $34,000), while Sedman’s went down 90% (from $4.8 million to $950,000) in just eight weeks. The plaintiffs say they paid Morgan Stanley $1.1 million in fees.

According to the women’s securities attorney, the business partners wanted long-term safe investments for their super funds. Instead, what they purportedly got was an “aggressive” trading plan that cost them close to $5 million, while Kearney earned $379,000 in commissions from Sedman and $188,000 from Middelton. Their lawyer says that because of Kearney’s reassurances, their lack of knowledge about how much risk was really involved, and their difficulty in fully comprehending their trading position, they ended up moving forward with trades that they otherwise would not have gotten involved in.

Large Financial Firms Roundup: Securities Fraud Suit Against Citigroup is Dismissed by 2nd Circuit, AIG Wants to File MBS-Related Cases Against Banks, & District Court Reconsiders Partial Dismiss of Class Action Against Morgan Stanley in Pension Fund Case

Published on: January 21, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Second Circuit Dismisses Securities Fraud Lawsuit Against Citigroup

The U.S. Court of Appeals for the Second Circuit has affirmed the district court’s decision to throw out the securities fraud lawsuit filed by a real estate developer against Citigroup (C) and its former CEO Vikram Pandit. Sheldon H. Solow had accused both of them of allegedly making omissions and misstatements that highlighted the bank’s liquidity and capitalization while downplaying financial problems. Because of this, he contends, the financial firm’s stock price became artificially inflated and then fell when the truth about the firm’s financial health became known.

The appeals court held that while Solow, in his securities lawsuit, did an adequate job of pleading alleged misstatements and omissions about Citigroup’s liquidity, he did not succeed in showing that the statements caused his financial losses. It also dismissed his control-person claim against Pandit, saying that there was a failure to plead a primary violation by the bank.

Morgan Stanley & Goldman Sachs Settle Federal Homeowner Foreclosure Complaints for $557 Million

Published on: January 16, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Goldman Sachs (GS) and Morgan Stanley (MS) have agreed to collectively pay $557M to settle complaints accusing them of wrongfully foreclosing on homeowners. Under their respective agreements with the Federal Reserve, Morgan Stanley will pay $227M while Goldman will pay $330M.

Approximately 220,000 people who lost their homes due to “robo-signing” and other abuses could receive compensation as a result. Per the agreement with the two investment banks, they will pay $232 million in cash to compensate homeowners. This will conclude the loan files review against the two banks that were ordered in 2011. Cash payments will vary and may go as high as $125,000 to borrowers whose homes foreclosed in 2009 and 2010. $325M will go toward lowering mortgage balances and forgiving outstanding principal on home sales that made less than what borrowers owed on mortgages.

The deals stuck by Morgan Stanley and Goldman Sachs is similarly structured to the $8.5B one reached last week with JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), Wells Fargo (WFC), PNC Financial Services (PNC), MetLife Bank (MET), SunTrust (STI), Sovereign (SOV), Aurora, and US Bank. They are paying 3.8 million homeowners approximately $3.3 billion to conclude the foreclosure review. $5.2 billion is for forgiveness of principal and mortgage modifications. Ally Financial and HSBC are in talks to work out similar settlements. The Fed reports that now, over 4 million borrowers will receive cash compensation.

Morgan Stanley Must Pay Ex-Manager $1M

Published on: January 3, 2013 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority arbitration panel says that Morgan Stanley (MS) Smith Barney has to pay Gregory Carl Torretta $1 million. The financial firm’s ex-manager claims that he was forced to unfairly resign.

Torretta had sought $8 million to $9 million for what he claims were wrongful termination and the breach of his employment contract. Torretta contends that Morgan Stanley had accused him of criticizing the performance of a branch manager, whom he was about to fire, and that he was going to take that person with him to another firm. The allegations surfaced after the branch manager, who was unhappy with the oversight, wrote Torretta implying that the latter had talked about leaving the brokerage firm and suggested that he also leave with him. The branch manager cc’ed Torretta’s boss on the email.

Torretta says that the firm then told him he could either resign or be fired, so he resigned. He is now employed with Ameriprise Financial Services Inc. (AMP). The branch manager was letter let go.

Stockbroker Fraud Headlines: Wells Fargo Banker Charged Over $11M Insider Trading, Morgan Stanley to Resolve Facebook IPO Action for $5M, & SEC Accuses Canadian Broker of Inadequate Day Trader Supervision

Published on: December 28, 2012 | by Shepherd Smith Edwards & Kantas, LLP

Wells Fargo Banker and 8 Others Accused of Alleged $8M Insider Trading Scam

The U.S. Attorney for the Western District of North Carolina is charging Wells Fargo (WFC) investment banker John Femenia and eight alleged co-conspirators with involvement in an alleged $11 million insider trading scam. Femenia is accused of stealing confidential data from his employer and its clients about acquisitions and mergers that were pending. He then either directly or via others tipped his co-conspirators, receiving kickbacks in return.

According to the N.C. government, the insider trading scam resulted in $11M in profits. While six of the co-conspirators opted to plead guilty to conspiracy to commit insider trading, Femenia and the other two have been indicted on multiple charges of conspiracy and insider trading. The same defendants, and another person, are also named in the SEC lawsuit over the scheme.