FINRA Arbitration Panel: Morgan Stanley Liable For More Than $11.6 Million In Damages

On December 1st, 2022, a FINRA Arbitration Panel in Tampa, Florida awarded more than $11.6 million in damages to claimants (Case Number: 21-02127). Morgan Stanley—that national brokerage firm headquartered in Westchester County, New York—was the respondent in the case. The firm was found liable for unauthorized sales and transactions of certain securities. Here, our Miami investment fraud attorneys discuss the FINRA arbitration panel’s decision in more detail.

Allegations: Unauthorized Sales & Transactions 

The claimants in this FINRA arbitration case were Dr. Anthony E. Nowak and the Trustee of the Anthony E. Nowak Revocable Trust. The respondent was Morgan Stanley. In the Statement of Claim filed by the investors, there are several different allegations raised against the brokerage firm. Among other things, the claimants alleged:

• Negligence;
• Breach of fiduciary duty;
• Failure to supervise;
• Violations of FINRA rules;
• Breach of contract;
• Breach of Florida state securities law; and
• Unauthorized trading.

The allegations in question involve a number of different major securities, including Tesla, Salesforce, Microsoft, and Apple. Notably, the investors contend that Morgan Stanley, and representatives of the brokerage firm engaged in unauthorized sales and unauthorized trading and, in doing so, caused significant financial losses.

FINRA Arbitration Award: More than $11.6 Million in Compensation

In reviewing the allegations and the evidence presented by the parties, the Florida-based FINRA arbitration panel awarded significant financial compensation to the claimants. More specifically, the investor and trustee were granted the following financial relief:

• $11.5 million in compensatory damages; and
• $157,656.81 in legal costs. 

Brokers and Broker-Dealer Must Have Proper Authorization to Make Transactions 

Brokers and broker-dealers are professional intermediaries who facilitate the buying and selling of securities on behalf of their clients. In order to legally carry out these transactions, they must be properly authorized by the Financial Industry Regulatory Authority (FINRA), which is the largest independent regulator for all securities firms doing business in the United States. All broker-dealers and registered representatives have a duty to comply with industry rules.

FINRA strictly prohibits unauthorized trading. Brokerage accounts are divided into two broad categories: Discretionary trading accounts and non-discretionary trading accounts. Discretionary accounts are those in which the broker has the authority to make transactions on behalf of the client without obtaining their prior approval for each individual trade. In contrast, non-discretionary accounts require clients (investors) to give their explicit approval for each individual transaction.

 Consult With Our Miami, FL Securities Fraud Attorney for Immediate Help

At ​Carlson & Associates, P.A., we are a law firm committed to representing investors who have been defrauded. Our firm has experience handling a wide range of unauthorized trading claims. If you or your loved one was the victim of any type of investment fraud, we are here as a resource. Give us a phone call now or connect with us online to arrange a completely confidential case review. Our law office is located in Miami and we represent investors throughout the region.

Source:

finra.org/sites/default/files/aao_documents/21-02127.pdf