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Morgan Stanley Smith Barney, or more accurately, its predecessor Morgan Stanley & Co., the
Morgan Stanley part of the June 2009 joint venture with Morgan Stanley & Co. and the Smith Barney division of Citigroup Global Markets, Inc., is no stranger to e-mail problems.
In a Financial Industry Regulatory Authority ("FINRA") securities arbitration, we represented an individual investor, whose account was made worthless trading unapproved Morgan Stanley low priced and otherwise highly speculative securities on margin, and it was uncovered by our firm and later determined by FINRA Regulation that the subject Morgan Stanley stockbroker in Scranton Pennsylvania has used the Morgan Stanley e-mail system, in addition to his own private e-mail while at work to send our client materially misleading, exaggerated and false statements concerning the subject securities, which approximately 18 of his other customers owned, including the broker and his family members, but which according to firm records were falsely marked unsolicited.
On September 28, 2007, the Financial Industry Regulatory Authority ("FINRA"), formerly known as NASD Regulation, Inc., ordered Morgan Stanley to establish a $9.5 million settlement fund for certain securities arbitration claimants whom were denied certain E-mails and updates to the firm’s Supervisory Manual in connection with their arbitration claims against Morgan Stanley.
This particular case, however, involves Nathaniel A. Finkin of Morgan Stanley Smith Barney’s Harrisburg, Pennsylvania office. According to an Acceptance, Waiver & Consent, pursuant to which Mr. Finkin was barred from the securities industry for life, Mr. Finkin was found to have fabricated at least two e-mails to his firm concerning a mortgage application by his customer. Mr. Finkin fabricated the e-mails to make them appear that they came from the customer’s lawyer, when in fact they came from Mr. Finkin. Apparently, Morgan Stanley compensates its registered representatives for initiating mortgage loans with customers.
FINRA’s decision was rendered on September 13, 2011. However, it appears that Mr. Finkin was terminated by Morgan Stanley in September 2009. According to Mr. Finkin’s FINRA Public Disclosure Records, Mr. Finkin was not terminated for fabricating e-mails, or impersonating through the e-mail his customer’s lawyer. No, Mr. Finkin was terminated for "inappropriate use of personal e-mail to conduct firm business."
If anyone ought to be sanctioned, it ought to be the person that provided this false and misleading mischaracterization of the facts and circumstances surrounding Mr. Finkin’s termination that was reported to FINRA. Such conduct, however, and the sanitizing or misleading editorialization of broker misconduct to securities regulators on Form U-5, and on Disclosure Reporting Pages, is not new. Recently, we had a case where a broker had forged customer signatures on transfer orders literally stealing hundreds of thousands of dollars from more than a dozen customers, and the firm, who initially refused to pay the customer victims, and tried to keep the whole incident or incidents a secret, terminated her for "signature irregularities."
Here of course, no one was harmed, and not surprisingly, even two years later, FINRA did something. Certainly, if any customer was harmed, and there was any civil exposure, FINRA would have taken much longer to take action, at least until the statute of limitations may have expired, and also one would assume that Mr. Finkin would not have been fired, but instead represented by Morgan Stanley’s in-house counsel and perhaps bestowed the title of Senior Vice President, particularly if his gross commission production was substantial.
If you have been suffered losses as a result of stockbroker misconduct, you should consult with a lawyer. The securities industry has experienced and highly qualified lawyers that defend them, and injured consumers and public customers need experienced and qualified lawyers to prosecute their claims.
Nicholas J. Guiliano, Esquire, The Guiliano Law Firm, P.C. Our practice is limited to the representation of investors in claims, typically FINRA securities arbitrations, for fraud in connection with the sale of securities, the sale of unsuitable securities, the sale of defective financial products, the failure to disclose risk, broker theft, breach of fiduciary duty, the sale of Ponzi schemes, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
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