In the ongoing saga of fired Morgan Stanley advisor Ami Forte, the Financial Industry Regulatory Authority issued a notice of complaint on Thursday, raising seven issues tied to her and another advisor’s management of assets owned by the estate of Roy M. Speer, a co-founder the Home Shopping Network, Forte’s longtime client with whom she had an affair.
Forte disputed the FINRA allegations on Friday, saying in a statement: “I intend to fully defend myself against these baseless charges, and I denounce the motives behind them. I am confident that my conduct will be shown to be beyond reproach. It’s typical of FINRA’s strong-arm and coercive tactics to file a series of absurd claims against me just days before Christmas.”
FINRA argues in its complaint that, from September 2011 to June 2012, Forte and Charles Joseph Lawrence “exploited [Speer], a 79-year-old customer suffering from severe cognitive impairment” and generated over $9 million in commissions in less than one year through “excessive trading.”
Though Forte and Lawrence knew Speer suffered severe cognitive impairment, the two now-barred advisors never reported his condition to Morgan Stanley and “increased their level of trading” in his accounts — over 2,800 transaction in a 10-month period.
“In addition, many of these transactions involved unsuitable short-term trading of long-term investment products, such as income-producing bonds with long-term maturity dates,” FINRA said in the complaint.
These actions violated NASD Rule 2310, FINRA Rule 2010 and 2020, and MSRB Rules G-17 and G-19, as well as the Securities Exchange Act of 1934-Section 10(b) and Exchange Act Rule 10b-5, among others.
“Finally, Forte, who remained broker of record on [Speer’s] accounts and kept in near daily contact with [him], used her position of trust and confidence to exploit [him] while he was suffering severe cognitive impairment and to generate excessive commissions from his accounts.”
In March 2016, a FINRA arbitration panel ordered Morgan, Forte and McCoy to pay more than $34 million to Speer’s estate. Since then, Morgan Stanley has sued Forte to pay for some of that award, and she has sued the wirehouse for gender discrimination, defamation and wrongful discharge.
Her Side of the Story
Forte was once one of Morgan Stanley’s most celebrated and prominent financial advisors, with $2 billion in assets under management. She became an advisor in 1994.