The Financial Industry Regulatory Authority suspended an ex-Morgan Stanley broker for one month from association with any FINRA member in all capacities after he transferred more than $1 million from a client’s outside account to Morgan Stanley without first receiving proper authorization from the client, according to FINRA.
Without admitting or denying the findings, Sachin Kumar signed a letter of acceptance, waiver and consent May 14 in which he agreed to FINRA’s suspension and a $5,000 fine. FINRA accepted the letter Tuesday.
Morgan Stanley declined to comment. Nathaniel Z. Marmur, the attorney who represented Kumar in the FINRA dispute, did not immediately respond to a request for comment.
From May 2016 through August 2019, Kumar was registered with FINRA as a general securities representative with Morgan Stanley. However, on Aug. 28, the firm filed a Form U5 that disclosed it discharged Kumar over concerns regarding: (1) His reuse of previously signed account transfer forms. (2) The addition of information onto the previously signed forms to initiate the transfer of some of the client’s outside accounts to the firm. (3) The employee’s failure to escalate the client’s concerns regarding the transfers, according to the FINRA AWC letter.
The Form U5 also stated the “client was in discussion with the employee to transfer his accounts, but proper authorization was not obtained from the client to effectuate the transfer,” according to FINRA.
The client, identified only as “Customer A” by FINRA, had several accounts with Kumar at Morgan Stanley. During an in-person meeting in February 2019, Kumar and Customer A discussed potentially transferring additional brokerage accounts of Customer A to Morgan Stanley, so Kumar directed the client to sign a blank ACAT form. The ACAT form was not completed or submitted at that time, according to FINRA.
On April 11, 2019, Kumar and Customer A discussed transferring a brokerage account at another firm with a value of more than $1 million to Morgan Stanley, the regulator noted in the AWC letter. At that meeting, Customer A handed Kumar the account statements to be attached to the previously executed ACAT form.
On April 12, 2019, Kumar, “believing that Customer A had authorized the transfer of the account, completed the blank ACAT form that had been signed by Customer A in February and submitted it” to Morgan Stanley for processing, according to FINRA. But Customer A emailed Kumar later that same day and “directed Kumar not to transfer the account to Morgan Stanley,” according to FINRA, adding: “By the time Kumar responded the following business day, the transfer had already been processed.”
As a result of his conduct, Kumar violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), FINRA claimed.
According to Kumar’s profile on FINRA’s BrokerCheck website, he is currently associated with Laidlaw & Co. in New York. There are two disclosures on his profile: One of them the separation from Morgan Stanley and the other a customer dispute apparently related to what led to his termination from the firm. The customer’s attorney alleged signatures on transfer forms were doctored by Kumar in March 2019. However, the client, through his counsel, voluntarily withdrew the complaint and closed the matter, via a letter dated Sept. 24, according to BrokerCheck.
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