Morgan Stanley has fired several brokers over alleged abuses in its Former Advisor Program that enables brokers retiring from the firm to split fees and commissions with brokers who inherit their client accounts if they don’t compete after leaving the firm.
The exact number of brokers terminated by Morgan Stanley was not immediately clear. But AdvisorHub, which first reported the story, said about 10 brokers were fired in recent days after a nationwide investigation into brokers who were believed to be recording trades in the program incorrectly.
Morgan Stanley declined to provide specific details. A spokesperson only told ThinkAdvisor by email Thursday: “We expect Advisors who enter into partnership agreements to abide by those agreements and we are committed to ensuring that retiring Advisors receive what they are entitled to.”
It is indeed up to Morgan Stanley and other firms to enforce sunset programs like this, according to Danny Sarch, president of Leitner Sarch Consultants in White Plains, New York.
“Any of these sunset programs create a contract signed by the retiring advisor, the company, and the inheriting advisor,” he told ThinkAdvisor by email Friday. “It’s the company’s obligation to enforce the contract since the retired advisor will not have any access to the commissions and fees generated by their legacy book after they have left the firm.”
Marc S. Dobin of Dobin Law Group in Jupiter, Florida, confirmed to ThinkAdvisor Thursday that he is representing John Patrick Miller, a $1.5 million-producing broker in Ponte Vedra Beach, Florida, who was one of the brokers fired by Morgan Stanley.