The Financial Industry Regulatory Authority has barred ex-Morgan Stanley advisors Ami Forte and Charles Lawrence over excessive trading in the accounts of the late Roy M. Speer, a billionaire co-founder of the Home Shopping Network who suffered from dementia and who had an extramarital affair with Forte.
Forte developed a business and romantic relationship with Speer (identified as “RS” in FINRA documents) in the late 1990s. The advisor “used her position of trust and confidence to exploit RS and generate excessive commissions from his accounts,” according to FINRA.
The regulatory group says that from September 2011 through June 2012, the Forte Group made more than 2,800 trades in Speer’s accounts, which generated roughly $9 million in commissions. About half of the transactions were tied to short-term trades of long-maturity bonds, including municipal bonds.
“Despite being hospitalized and not in contact with anyone from the Forte Group, between June 20, 2012 and June 29, 2012, RS’s accounts had over $14 million in transactions,” FINRA said in a statement.
Speer died on Aug. 21, 2012. Morgan Stanley fired Forte in the spring of 2016.
The regulatory group’s latest action, according to Forte and her attorney Robert J. Pearl, “essentially amends FINRA’s complaint so that the only remaining charge against Ms. Forte relates to trading in the Roy Speer accounts engaged in and overseen by other Morgan Stanley employees, not Ms. Forte. In entering into this settlement, Ms. Forte has not admitted any wrongdoing whatsoever in connection with this one remaining charge.”
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 is suing the wirehouse for gender discrimination, defamation and wrongful discharge.
The ex-advisor said in a statement, “I am pleased that we have been able to reach an amicable settlement with FINRA to resolve this matter and to end potentially expensive and protracted litigation. As specified in the settlement, I have admitted absolutely no wrongdoing. In addition, FINRA will not be pursuing any claims against me for monetary fines or any form of restitution.”
Forte also says that she will no longer seek employment in the advisory industry. In addition, she maintains that she “neither placed nor supervised any of the trades that FINRA has deemed inappropriate.”
According to Pearl: “FINRA alone can explain why it gave Morgan Stanley, a firm which made many millions of dollars off the Speer accounts and was found liable in the underlying Speer arbitration proceeding, a free pass but filed charges against the Morgan Stanley personnel who were relying on Morgan Stanley’s management to properly supervise these accounts.”
The wirehouse said in 2016 that Forte’s claims “overlook the fact that she was already adjudicated as jointly liable for the award based on her conduct …, has failed to contribute anything to the amount awarded, and has also failed to repay substantial sums loaned to her in connection with her employment.”
A spokesperson with Morgan Stanley says the firm has no further comment.
— Related on ThinkAdvisor:
- FINRA Slams Ex-Morgan Stanley Broker Ami Forte Over Trades in Billionaire’s Account
- Ami Forte, Ex-Morgan Stanley Star, Portrayed Falsely by Former Boss, Lawyer Says
- Ex-Morgan Stanley Advisor Ami Forte Has a New Job After Scandal
- Ex-Morgan Advisor, Ami Forte, Grapples With Fallout of Affair With Billionaire Client, Roy Speer