Securities Lawyers Blog
The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Morgan Stanley involving broker Brian Sak (Sak). According to BrokerCheck records Sak is subject to one customer complaint and one employment separation for cause, and one judgment or lien.
According to Morgan Stanley, the firm terminated Sak after alleging Sak engaged in outside real estate investment with a client that was not appropriately disclosed to the firm. Often times such filings indicate that the broker is engaging potentially in private securities transactions, promissory notes, or loans away from the firm. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.
At this time it unclear the scope of Sak’s OBAs and/or private securities transactions. According to BrokerCheck records Sak has one customer complaint alleging that the broker sold a promissory note concerning real estate and that Sak recommended that the client invest in an outside real estate investment opportunity of which the Sak was a manager from 2011 to 2014. The complaint alleges $250,000 in damages and the dispute is currently pending. In addition, Sak disclosed a civil judgment of $2,355. An inability to pay debts may also be an indicator that a broker may solicit funds form his clients.
Sak’s records also disclose that he is involved in outside business activities including Southside Holdings, a rental property in Indiana and Chicago. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.
Sak entered the securities industry in 1999. From June 2009 until June 2016 Sak was registered with Morgan Stanley out of the firm’s Deerfield, Illinois office location.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.