What You Need to Know
- An ex-Morgan Stanley broker was fired by the firm last year after allegedly changing the rep code on 186 trades so only he would receive commissions on them.
- The broker was directed to change the code by a senior team member, leading the broker to mistakenly believe a retired rep had agreed to the changes, FINRA alleged.
- FINRA fined the ex-Morgan Stanley broker $2,500 and suspended him from associating with any FINRA member firm for 15 days.
The Financial Industry Regulatory Authority fined a former Morgan Stanley broker $2,500 and suspended him from associating with any FINRA member firm in all capacities for 15 days for allegedly increasing his commissions at the expense of another rep at the wirehouse by recording many transactions under only his own production number.
Without admitting or denying the broker-dealer self-regulator’s findings, John Patrick Miller signed a FINRA letter of acceptance, waiver and consent on Dec. 10, consenting to the sanctions to settle FINRA’s allegations. A FINRA attorney signed the letter on Dec. 22.
Morgan Stanley and Marc S. Dobin, a Jupiter, Florida, attorney who represented Miller, declined to comment on Wednesday.
Several Reps Affected
Miller was one of several brokers that Morgan Stanley fired last year 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.
Miller first became registered with FINRA in July 2011 as a general securities representative through an association with Morgan Stanley, according to his report on FINRA’s BrokerCheck website. Initially registered as a broker, he also became a registered advisor in 2017.
On Nov. 30, 2020, Morgan Stanley filed a Form 5 Uniform Termination Notice, disclosing that Miller was discharged over allegations that he “submitted transactions under his sole production number, at the instruction of the senior member of his team,” according to a disclosure on his report.
That was “inconsistent with the agreement entered into between the representative and others and a retired representative, resulting in a shortfall of revenue credited to the other representative,” the disclosure went on to say.
Code Changed for 186 Trades
From September 2015 through January 2018, Miller allegedly “changed the representative code for 186 trades, causing the trade confirmations to show an inaccurate representative code,” according to the FINRA AWC letter.
Although the firm’s system “correctly prepopulated the trades with the applicable joint representative code, Miller changed the code for the 186 trades to his personal representative code,” FINRA alleged.