Massachusetts Fines Morgan Stanley for Lack of Broker Oversight Case

By Dave Sebastian

The Massachusetts' state secretary ordered Morgan Stanley (MS) to pay $382,500 for allegedly not supervising one of its broker-dealer agents who hiked commission fees on investor accounts through excessive trading in a practice known as churning.

Massachusetts Secretary William Galvin claimed four Massachusetts investors lost money through their trades executed by Justin Amaral, a former Morgan Stanley agent. The state fined Morgan Stanley $200,000 and is also ordering the bank to pay $182,500 to the four investors.

Mr. Galvin's office alleged Morgan Stanley failed to supervise Mr. Amaral's trading activity, and didn't investigate his activities after a customer's accountant filed a complaint in April 2014.

According to the order, Morgan Stanley allegedly started investigating Mr. Amaral's trading activities after a customer's accountant found that Mr. Amaral was designated as the executor of an estate and as a beneficiary of the customer's will. Mr. Amaral allegedly hadn't disclosed such a relationship to Morgan Stanley, according to Mr. Galvin's office.

"We are pleased to resolve this matter which arose out of conduct from a financial advisor whose employment ended in May 2014," Morgan Stanley said in a statement.

The Financial Industry Regulatory Authority Inc. has barred Mr. Amaral from acting as a broker. Attempts to reach Mr. Amaral weren't immediately successful.

Write to Dave Sebastian at [e-mail]

(END) Dow Jones Newswires

October 30, 2019 11:47 ET (15:47 GMT)

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