Articles Tagged with New York Times

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.

According to a New York Times article this week entitled “To Crack Down on Securities Fraud, States Reward Whistle-Blowers,” securities regulators in Indiana and Utah are using informants, also known as “whistle-blowers,” to protect their residents from financial harm. Whistle-blowers have been helping regulators at the federal level for quite some time now, and now the states themselves are getting involved.

An Indiana whistle-blower was awarded $95,000 for helping state regulators bring an enforcement action against JP Morgan Chase for failing to disclose conflicts of interest to clients about the way the bank invested their money. That was the first award given under Indiana’s whistle-blower program aimed at securities law violators. In this particular case, the informant told regulators about JP Morgan’s practice of steering clients into in-house funds that generated more costs to the clients, and, at the same time, more fees to the bank itself. The award stated JP Morgan’s practices as “outside the standards of honesty and ethics generally accepted in the securities trade and industry.” Indiana’s program was adopted in 2012 by its state legislature and officials can award up to 10% of monetary sanctions received in an enforcement statement to the whistle-blower.

Utah’s program, adopted in May 2011, allows a whistle-blower to receive up to 30% of the proceeds as an award. The first award Utah awarded was in 2014 to an investment adviser who told officials about $150,000 in questionable transactions he had witnessed while analyzing an elderly client’s holdings. He received $20,000 of the money.

The Department of Labor’s imposition of a mandatory fidcuairy duty on brokers handling retirement accounts.  The article also profiles a client of Stoltmann Law Offices who likely would not have been defrauded had a fiduciary duty been in place.  Please see below for the entire story.

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