Securities & Stock Broker Fraud Blog
Morgan Stanley terminated around ten brokers following a nationwide probe of alleged abuses in its inherited account program, according to lawyers, firm sources and former managers per advisor Hub. Miller Stern Lawyers – 410-Law-Firm is currently investigating clients of Morgan Stanley who are victims of, and suffered damages and losses, due to these abuses.
The investigation was prompted by complaints about underpayments from at least one retired broker who entered the Former Advisor Program (FAP), a so-called sunsetting plan that Morgan Stanley and other large firms have promoted heavily in an attempt to keep older brokers from joining other firms and taking clients with them.
according the the article, the programs allow older brokers to receive a split of fees and commissions paid by former clients for several years if the brokers let their practices lapse after they leave.
A spokeswoman for Morgan Stanley confirmed the review of the FAP but declined to comment on the results and any specific terminations.
“We expect Advisors who enter into partnership agreements to abide by those agreements, and we are committed to ensuring that retiring Advisors receive what they are entitled to,” she wrote in an e-mail.
“A source close to a California advisor who lost her position said the broker was also acting at the direction of a senior producer on her team. The retired advisor did not complain nor ultimately lose any credits”, the source said.
“Miscoding trades could set off regulatory alarms and books-and-records violation charges for firms, said other lawyers and headhunters who claimed knowledge of the investigations.
AdvisorHub verified the names of two advisors who have been terminated, a broker in Sarasota, Fla. who was producing around $1.5 million, was also found to have miscoded some revenue, said a person familiar with the charges.
Ridenour, who joined Morgan Stanley in 2010 after less than a year at UBS Wealth Management USA, could not immediately be reached for comment, according to Advisor hub.
In Los Angeles, Morgan Stanley terminated , who began her career in 2007 at its Smith Barney predecessor. Carpenter had inherited a $450 million book from a retired advisor, according to a person familiar with the issue.
Carpenter could not be reached for comment.
Sunsetting programs can be complex to manage and easy to game, but Morgan Stanley, Merrill Lynch, UBS and Wells Fargo Advisors have been enhancing them in an attempt to keep customer assets from leaving along with graying advisors.
Merrill Lynch last year said it plans to add up to 75 percentage points to the payouts of qualifying retiring brokers enrolling in its optimistically named “Client Transition Program.”
Morgan Stanley two years ago tweaked its FAP, in part to encourage younger advisors to participate by agreeing to subsidize more of the split they give up over the five-year program. It also aims to pre-enroll top-tier advisors well ahead of their retirements with a formula that gives them up to 80% of the payout on a former client’s account in the program’s first year according to the article.
In 2019, an arbitration panel found that Morgan Stanley breached its agreement to credit a retired broker with the full revenue she was allegedly entitled to under its FAP program, but denied the amount she sought in damages.
Miller Stern Lawyers, LLC, a Baltimore Securities Law firm, currently represents investors for claims of investment losses from unauthorized trading, over concentration, irregular options trading, margin and unsuitability claims, broker fraud, securities fraud, securities litigation and other broker and broker/dealers for investment losses and fraud. If you or anyone you know have experienced investment losses from the actions above or other situations, please call 410-LAW-FIRM ( 410-529-3476 ) or fill out the contact us form for a no cost consultation and evaluation of your claim