According to a recent New York Times article entitled “Morgan Stanley Neglected Warnings on Broker,” Steve Wyatt, a Morgan Stanley broker in Ridgeland, Mississippi, was accused of trading account erratically. He was also accused of improperly managing tens of millions of dollars in client money. Mr. Wyatt was with the company for five years, finally being terminated in 2012, after two years of investigation against him. Former clients claim they lost about half their money with him, or around $50 million. This past week, the Mississippi secretary of state said in a settlement with Morgan Stanley that it had “failed to reasonably supervise” Mr. Wyatt. The settlement subsequently barred Mr. Wyatt and his immediate supervisor from the securities industry for life and Morgan Stanley was forced to create a $4.2 million fund to reimburse clients for their losses. So far, in its cases, Morgan Stanley has had to pay about $3 million. Allegedly, Mr. Wyatt raised so much concern that Morgan Stanley supervisors stopped him from trading in his personal accounts, yet, the firm allowed him to continue to trade money he managed for clients.
In his first year at Morgan Stanley, Wyatt put his client’s money into only two stocks, BlackBerry and Valence, a batter maker that later went bankrupt. Four clients saw their stocks fall more than 60 percent. He also allegedly bought 60 percent of the outstanding shares in a small Israeli computer cable company, RiT, for his clients. The heavy concentration in a single stock was problematic. He was terminated by he firm when evidence showed he had been using a personal email address to push clients to buy investments that he held in his own private accounts. Morgan Stanley can be liable for investment losses because of Mr. Wyatt, or another broker’s failure to take into account client’s best interests. We sue firms such as Morgan Stanley in the arbitration process for clients who have lost money, and we do so on a contingency fee basis only, so we only make money if you recover yours. Please call us today to discuss your options. The call is free.