Morgan Stanley

Richard Lucker Subject to $14,000,000 Customer Complaint

July 3, 2017 | by Staff Attorney

In March 2017, Broker Richard Lucker (Lucker) was subject to a massive complaint alleging $14,447,501 in damages. Lucker is currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo). According BrokerCheck the customer complained that there was a failure to supervise with respect to Lucker’s management of her account from 2011 to 2013. There are no other details provided as to which products or the type of trading activity that occurred that caused the losses complained of. The complaint is currently pending. The securities lawyers of Gana Weinstein LLP continue to investigate the customer complaint against Lucker.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. 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.

According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

Barry Connell Accused by SEC of Misappropriating $5 Million of Client Funds

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating allegations by The Securities and Exchange Commission (SEC) finding that former Morgan Stanley broker Barry Connell (Connell) working out of the Ridgewood, New Jersey office misappropriated about $5 million from clients. After a customer complained of about $2,500,000 in unauthorized fund transfers in November 2016 Morgan Stanley terminated Connell about a week later. Morgan Stanley terminated Connell on ground that there were “Allegations regarding unauthorized withdrawals and transfers of funds from client’s household accounts to third-party payees, which appear to be for the benefit of the former registered representative.” Thereafter, Connell was barred by the Financial Industry Regulatory Authority (FINRA) for failing to provide documents and information related to Morgan Stanley’s statement.

In February 2017, the SEC alleged that Connell stole money from investors to settle a private lawsuit among other misuses. Connell was alleged to have engaged in misappropriation of approximately $5 million from investment advisory clients. The SEC found that from approximately December 2015 through November 2016, Connell carried out his scheme primarily by moving funds between client accounts and then sending wire transfers and checks from the accounts to third parties for his own benefit. The SEC stated that over the course of approximately 11 months Connell made more than 100 unauthorized transactions through forms falsely representing that he had received verbal client authorizations for the transactions. The SEC changed that this conduct was the engaging in transactions, acts, practices and courses of business that constitute violations of Section 206(1) and Section 206(2) of the Investment Advisers Act of 1940.

Connell entered the securities industry in 1998. Since May 2008, Connell was associated with Morgan Stanley.

INVESTOR WARNING: Broker Stanley Clayton Niekras Subject to Multiple Complaints by Investors and FINRA

April 25, 2017 | by Staff Attorney

The securities and investment fraud attorneys at Gana Weinstein LLP are investigating the regulatory complaint filed by The Financial Industry Regulatory Authority (FINRA) against broker Stanley Clayton Niekras (Niekras). The FINRA regulatory action alleges that Niekras recommended unsuitable variable annuity exchanges in three customers’ accounts. FINRA found that Niekras effected the annuity exchanges to benefit himself at the customers’ expense. Niekras allegedly misrepresented himself to a couple in their 90s claiming $70,000 of fees due for financial planning services. According to BrokerCheck records, Niekras has been subject to eight customer complaints and one regulatory action among other claims.

The FINRA complaint alleges that Niekras made fraudulent misrepresentations to an elderly couple in their 90s to collect more than $70,000 in estate and financial planning fees while associated with the brokerage firm MML Investors Services, LLC. FINRA alleges that Niekras didn’t have an investment advisory or financial planning agreement with the elderly couple, but he billed them for hundreds of hours of time that he supposedly spent working on their “financial future”, work that he claimed to have done over four years knowing he wasn’t entitled to the “estate planning” or “financial planning” fees he charged. In February 2013, he recommended that the children buy a particular variable annuity with the gifted assets, anticipating collecting about $75,000 in commissions from the sales. The claim is currently pending.

The most recent complaint was filed in December 2010 alleging unsuitable variable annuity recommendations in clients account from January 1995 through March 2005 causing over $5,000 in damages. The claim settled for $247,500.00.

Morgan Stanley Advisor Albert Dishner Subject to Customer Complaints

February 6, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaint filed with The Financial Industry Regulatory Authority (FINRA) against broker Albert Dishner (Dishner), currently associated with Morgan Stanley. According to BrokerCheck records Dishner has been subject to at least four customer complaints among other claims. The customer complaints against Dishner allege securities law violations that including unsuitable investments, unauthorized trading, churning (excessive trading), and breach of fiduciary duty trading among other claims.

The most recent complaint against Dishner was filed in August 2016, while employed at Credit Suisse Securities, alleging $600,000.00 in damage stemming from violation of FINRA rules and federal securities laws, churning, and trading negligently in customer’s account from 2010 until 2015. The complaint settled in December 2016 for $205,000.00.

In 2012 a customer filed a complaint alleging, while employed at Credit Suisse Securities, Dishner did not follow customers instructions to sell securities and later executed an unauthorized sale causing $354,000 in damages. The complaint was denied.

Former Morgan Stanley Broker Wendy Feldman Discharged Over Unauthorized Trading

February 4, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Wendy Feldman (Feldman) currently associated with H. Beck, Inc. (H. Beck) alleging Feldman engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims. According to BrokerCheck, Feldman currently has two customer complaints and one employment termination for cause.

In July 2015, a customer brought a complaint against Feldman alleging that between 2011 to 2014 the broker engaged in unauthorized trading, made unsuitable purchases, and failed to disclose fees. The complaint alleged damages of $5,000,000. In 2016 an arbitration was held and the customer was awarded $8,606,599 in total.

Shortly after the arbitration award Morgan Stanley terminated Feldman due to allegations involving adherence to industry rules and/or firm policy including with regard to use of trading discretion.

FINRA Bars Broker Brian Sak Over Private Securities Sales

January 28, 2017 | by Staff Attorney

Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Brian Sak (Sak). According to brokercheck, Sak consented sanctions and an entry of findings that he failed to provide documents and information requested by FINRA during the course of its investigation into allegations that he solicited a client to invest in an outside business. FINRA’s investigation followed Morgan Stanely’s termination of Sak in May 2016 after the firm stated that it had concerns related to outside real estate investment with a client that was not appropriately disclosed to the firm.

At this time it is unclear the total scope and extent of these outside business activities and private transactions but according to Sak’s disclosures he is involved in Southside Holdings which is engaged in real estate rentals. To date five customers have come forward to complaint about investment losses related to Sak’s real estate transactions.

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”. Often times brokers who engage in this practice use outside businesses in order to market their securities.

Financial Advisor Cary Kievman Subject to Multiple Customer Complaints

December 9, 2016 | by Staff Attorney

Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against financial advisor Cary Kievman (Kievman) alleging unsuitable investments and over concentrated positions among other claims. According to brokercheck records Kievman has been subject to five customer complaints.

In August 2016 a customer filed a complaint involving Kievman alleging that from April 2013-October 2014, and from September 2015-December 2016, respondent recommended unsuitable short-term equities, over-concentrated the account in equities, and that he did not receive advice regarding his 2015 required minimum distribution which caused him to miss the RMD and suffer a penalty of $6,000. The claim is current pending.

In a complaint filed in March 2016, a customer alleged that Kievman recommended unsuitable investments that were over-concentrated and did not code her risk tolerance correctly or fully disclose the risks of the investments. The customer is claiming $143,394 in damages. The claim is currently pending.

Broker Investigation: Victor Lambert

December 2, 2016 | by Staff Attorney

Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against financial advisor Victor Lambert (Lambert) currently not registered with any firm, alleging unsuitable investments among other claims. According to brokercheck records Lambert has been subject to seven customer complaints and two judgement/liens.

In January 2016 Lambert disclosed a tax lien of $46,706. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

In October 2015 a customer filed a complaint alleging that Lambert purchased two equities that were inappropriate for the client causing damages. The claim was resolved for $85,000.

Massachusetts Files Complaint Against Morgan Stanley Alleging Unfair Sales Contests to Sell Securities Backed Loans

November 29, 2016 | by Staff Attorney

Our firm has previously reported on the growing trend of brokerage firms recommending non-purpose loans secured by their brokerage accounts to clients. See Investors Risk Big Losses with Loans Secured by Securities Collateral Accounts. Recently, the state of Massachusetts charged Morgan Stanley with conducting unethical – high-pressure – sales contests among its financial advisers to encourage clients to take out loans. According to newsources, from January 2014 until April 2015, the firm ran two different contests involving 30 advisers in Massachusetts and Rhode Island with the express goal of persuading customers to take out securities-based loans (SBLOCs) with their securities accounts serving as collateral. Advisers were promised bonuses of $1,000 for 10 loans, $3,000 for 20 loans and $5,000 for 30 loans. The contest was alleged to have generated $24 million in new loans and was run despite an internal Morgan Stanley prohibition on such initiatives.

As a background, these lines of credit allow investors to borrow money using securities held in the investment accounts as collateral and allow the investor to continue to trade securities in the pledged accounts. An SBLOC typically requires monthly interest-only payments until repaid. Thus, when an investor losses a significant amount of their portfolio the investor has made very little progress in repaying the loan and may have few to no options to pay the loan back. Recently FINRA issued an “Investor Alert” entitled “Securities-Backed Lines of Credit – It May Pay to See Beyond the Pitch” recognizing the conflicts between brokerage firms incentivized by “SBLOCs [that] can be a key revenue source for securities firms” and those same firms “placing your financial future at greater risk.”

According to Fortune, firms such as UBS, Bank of America, Merrill Lynch, Morgan Stanley, Wells Fargo, and JP Morgan are recommending that their high net worth investors take out loans against their brokerage accounts at an alarming rate. The Wall Street Journal reported that securities based loans increased by 28% at UBS between 2011 and 2013. According to Fortune, a Wells Fargo advisor told the writer that the loans are so lucrative for the brokers that they refer to the money they make as their 13th production month. Another contact with Morgan Stanley reported that a regional manager would like to automatically send paperwork for loans with every single new account form.

Leonard Fox Barred Over Borrowing Customer Funds

October 31, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the regulatory complaint filed by The Financial Industry Regulatory Authority (FINRA) involving former FSC Securities Corporation (FSC) broker Leonard Fox (Fox) out of the firm’s Marlton, New Jersey office. According to BrokerCheck records Fox has been subject to four customer complaints and two regulatory actions.

In August 2016, FINRA brought a regulatory action and barred Fox from the industry. (FINRA No. 2016050482101). FINRA alleged that Fox consented to the sanctions and findings that he failed to respond to FINRA’s requests for documents and information related to an investigation into allegations that he had borrowed and misappropriated funds from a firm customer. This was not the first time FINRA accused Fox of borrowing customer funds. In May 2012, FINRA brought a separate action against Fox alleging that Fox borrowed $10,000 from a client and suspended him for 10 days. 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 is unclear the nature and scope of Fox private securities transactions. However, according to brokercheck records, Fox has disclosed OBAs listed as including Fox Wealth Management Group, LLC. 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.