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Regulation and Compliance > Federal Regulation > FINRA

Morgan Stanley Must Pay Over $100K to Client: FINRA Arb Panel

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What You Need to Know

  • The more than $100,000 awarded by the FINRA arbitration panel was significantly less than what the claimant had sought.
  • Morgan Stanley allegedly violated securities laws related to unsuitable investments made with her funds.
  • The wirehouse allegedly failed to adequately supervise its brokers who used her funds to invest in energy, medical and pharmaceutical firms.

Morgan Stanley must pay $100,000 in compensatory damages and $4,900 in legal and other fees and costs, plus interest, to a client who alleged the firm failed to adequately supervise when unsuitable investments were made on her behalf, according to a Financial Industry Regulatory Authority arbitration award on Wednesday.

Morgan Stanley declined to comment Thursday on the matter.

In the statement of claim, Nancy J. Tucker asserted that Morgan Stanley violated the Securities Exchange Act of 1934, made unsuitable investments, and was guilty of breach of fiduciary duty, negligent failure in supervising its brokers, and common law fraud. The causes of action related specifically to investments that were made with her funds in Cyclacel Pharmaceuticals, Quick-Med Tech and Royale Energy.

In the statement of claim, Tucker requested compensatory damages of $1.14 million, lost income under the “well managed portfolio” theory of recovery, punitive damages, interest at the rate of 6% per annum, attorneys’ fees and costs, and any other relief that was “just, fair and equitable.”

Morgan Stanley requested that the arbitrators dismiss all claims in the statement of claim in their entirety, and award it costs in defense of the proceeding.

At the hearing, Tucker requested damages in the amount of $1.04 million; interest in the amount of $209,054; and attorneys’ fees and costs in the amount of $138,367.

Nicholas J. Guiliano of the Guiliano Law Firm in Philadelphia, who represented Tucker, did not immediately respond to a request for comment on his client being awarded significantly less money than she requested.

Morgan Stanley is also on the hook for $18,200 owed to FINRA for hearing session fees, the panel said.

(Pictured: Morgan Stanley headquarters in New York; Photo: Bloomberg)


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