Securities Lawyers Blog
Adviser Michael Greenstone (Greenstone), currently employed at Merrill, Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch), has been subject to at least nine customer complaints during the course of his career. Eight of the nine complaints against Greenstone allege unsuitability. In addition, Greenstone recently had nine customer complaints expunged in mass from his record using FINRA’s notoriously flawed expungement process. According to the PIABA Foundation, 1,078 expungement-only cases have been filed from 2015 to 2018. The study concluded that “The Finra [expungement] process is being systematically gamed, exploited and abused with one-sided hearings, manipulation of arbitrator selection, deletion of significant customer complaints and abusive (and possibly fraudulent) conduct to such an extent that it must be frozen until it can be repaired.”
According to a BrokerCheck report, there have been two complaints against Greenstone in the past two years alleging him of making unsuitable investment recommendations. The most recent allegation against Greenstone is pending and the customer is seeking $5 million in damages for unsuitable investment recommendations made from 2013 through 2019. Over the course of Greenstone’s career, several customers have accused him of making unsuitable investment recommendations. The aggregate settlement amount for his collective complaints is in excess of $240,000.00. Greenstones two largest reported settlements occurred in 2009 and in 1999. In July 2009, a customer alleged Greenstone placed her in a portfolio that was not suitable for her risk tolerance and age. This matter settled for approximately $114,000.00. Moreover, in July 1999, accused Greenstone of excessive and unsuitable trading. This matter settled for $106,000.00.
Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short-term goals, age, disability, income needs, or any other relevant factor.
Greenstone entered the securities industry in 1980. He has over 40 years of experience. From 1992 through 1984, Greenstone was registered with Riviere Securities Corporation. From 1984 through 1989, Greenstone was registered with Drexel Burnham Lambert Inc. From 1989 through 1990, Greenstone was registered with Smith Barney Harris Upham & Co, Inc. Form 1990 through 1992, Greenstone was registered with Prudential Securities, Inc. From 1992 through 2009, Greenstone was registered with UBS Financial Services, Inc. From 2009 through 2017 Greenstone was registered with Morgan Stanley both in New York and later in Florida. Since March 2017, Greenstone has been registered at Morgan Stanley.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to suitability violations. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.