Finra suspends ex-Morgan Stanley broker who made hundreds of CD trades for elderly client

The broker, David Strnad, "exceeded the scope of his authority" when he made the trades, according to Finra

May 31, 2019 @ 1:25 pm

By Bruce Kelly

A veteran broker formerly with Morgan Stanley was suspended on Friday for 18 months by the Financial Industry Regulatory Authority Inc. over a matter involving hundreds of trades of bank-issued certificates of deposit in the account of an elderly client that caused losses of $100,000.

(More:Two women arrested for defrauding elderly California woman)

The broker, David Strnad, was registered with Morgan Stanley and its predecessor firms from 1989 to 2016, according to his BrokerCheck report. In September 2016, a client's daughter made an allegation of churning with respect to the trading of CDs in her father's account, according to BrokerCheck. Finra soon after opened an investigation into the matter.

According to the settlement between Finra and Mr. Strnad, the broker made more than 270 trades from 2013 to 2015 involving CDs in accounts of an elderly customer. Although the client authorized Mr. Strnad to buy the CDs, the broker went beyond "the scope of his authority" by selling those CDs prior to their maturity and using the proceeds from the trades to buy more CDs for the client.

Mr. Strnad's trading caused the client to pay almost $4,300 in unnecessary commissions, according to Finra. After the client's daughter made the complaint, Morgan Stanley provided compensation to the client, according to the Finra settlement, which was in the form of a letter of acceptance, waiver and consent. Mr. Strnad agreed to the settlement without admitting or denying the findings, according to Finra.

(More:Finra exams to probe compliance with elder abuse rules)

A spokesperson for Morgan Stanley, Christy Jockle, said the company declined to comment.

Mr. Strnad's attorney, Alan Wolper, said that "while we do not deny the findings of the matter, the context of what happened is more in line with [Mr. Strnad] exceeding the scope of discretion he received orally from the client."

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