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Home > Blog > Monthly Archives: October 2016

Monthly Archives: October 2016

Attorney Mark Maddox quoted in IBJ article in Veros Case

Click the link to view the article

http://www.ibj.com/articles/60826-victims-to-collect-money-soon-in-veros-case

Morgan Stanley – Dishonest & Unethical Conduct Harms its Customers

As reported this week in The Wall Street Journal (“Massachusetts Charges Morgan Stanley Over High-Pressure Sales Contest”), Massachusetts officials have charged Morgan Stanley with dishonest and unethical conduct for running high-pressure sales contests between September 1, 2013 and August 20, 2015.

This latest complaint – which alleges that “Morgan Stanley’s firm-wide culture emphasizes the aggressive cross-selling of banking and lending products to wealth management clients,” comes on the heels of a cross-selling scandal at Wells Fargo & Co., where employees opened as many as two million unwanted accounts for unsuspecting customers.

As alleged in the Massachusetts regulatory complaint, “Financial Advisors, often owing a fiduciary duty to their clients, were now in the business of recommending that their clients burden themselves with debt. Financial Advisors responded to the incentives by nearly tripling their banking and lending production during the Sales Contest. The Sales Contest generated new loan balances totaling nearly $24 million.”

Morgan Stanley Financial Advisors, working with Private Bankers, purportedly began actively pushing banking and lending products, including Morgan Stanley’s Portfolio Loan Accounts (“PLAs”), on clients.

PLAs are securities-based loans that allow customers to borrow money against the value of the securities in their investment accounts, with the customer’s securities serving as collateral for the loan.

The risks associated with securities-based loans are material. For example, in the event that the value of a client’s securities pledged as collateral should decline significantly, Morgan Stanley may liquidate those securities if the client is unable to post additional collateral – liquidations that may be effectuated without prior notice to customers.

The complaint further alleges that “Morgan Stanley provided Financial Advisors with dozens of triggers for Financial Advisors to use as catalysts to cross-sell PLAs, such as mortgage funding, tax liabilities or obligations, weddings, and graduations. In addition, Morgan Stanley’s internal-use materials also offered suggestions on how to overcome client objections to borrowing against their portfolios.”

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with Morgan Stanley, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).


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