Morgan Stanley Told to Pay More Than $2.3 Million in Arbitration Case

Firm accused of unauthorized trading and other misdeeds by brokers in Jackson, Miss.-area branch

The six investors had accused the firm and the branch manager, Fred Brister, of failing to supervise brokers Steven Wyatt and Hilary Joseph Zimmerman, who the investors alleged had mismanaged customer accounts and engaged in suspect trading, according to their arbitration claim with the Financial Industry Regulatory Authority. The alleged misconduct occurred over a period of roughly four years starting in 2008, said Joseph Peiffer, a New Orleans-based lawyer representing the investor group.

The arbitration panel awarded the investors a combined $1.5 million in damages plus interest, along with $104,000 in punitive damages and more than $677,000 in legal and other costs, according to the award posted on Finra’s website. As is customary, the Finra arbitrators didn’t provide details on the reasoning for their decision, which was dated July 24. The investors had sought at least $4.4 million in damages, plus other amounts.

Asked about the award, a Morgan Stanley spokeswoman said the claimants “were a group of experienced and sophisticated investors who were awarded only a portion of the damages they claimed to have incurred in pursuing an aggressive, growth strategy in their accounts during the 2008 market crash and following volatile time period. Morgan Stanley takes its responsibilities to its customers seriously and respectfully disagrees with the arbitrators’ decision.”

Credit: Wall Street Journal

 

Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


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