Morgan Stanley Has Consented to Sanctions Including a Censure and Civil Penalty of $1 Million

Morgan StanleyAccording to an April 2017 report by AdvisorHub, Morgan Stanley has reached a settlement with the State of Massachusetts in connection to “charges that it ginned up sale of portfolio-backed loans in parts of its New England region through sales contests that rewarded brokers with higher expense accounts and paid $50 for each processed loan application to sales assistants.” Fitapelli Kurta is interested in speaking with investors who have complaints regarding investments made in such products through Morgan Stanley.

Morgan Stanley has neither admitted to nor denied the charges but has consented to sanctions including a censure and a civil penalty of $1,000,000. The alleged misconduct, which would also have been in violation of the firm’s internal policies and procedures, constituted the firm “successfully influenc[ing] 30 brokers and managers in five offices in Massachusetts and Providence, R.I., from late 2013 to early 2015 to open bank lines and have clients draw them down by offering as much as $5,000 of extra ‘business development allowances’ (BDA) to brokers who met targets,” according to the report. AdvisorHub also cites a private internal email which states that the alleged incentive program, in 2014, “generated a 272% increase over the previous year in securities-based loans (known internally as PLAs) and new loan balances of almost $24 million.”

The state’s findings included allegations that “compliance and risk officers turned thumbs down on the program when they learned of it after bankers tried to extend it in the New England complex and expand it to a Pittsburgh complex,” but that those risk officers did not enforce their decisions, per the AdvisorHub article. Morgan Stanley got rid of its New England region during a January restructuring.

If you have lost money investing portfolio-backed loans through Morgan Stanley, call Fitapelli Kurta at 877-238-4175 without delay. You may be entitled to recoup your losses. We accept all cases on contingency: Fitapelli Kurta only gets paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.