Former Morgan Stanley broker fined $5,000 over client settlement

Eric Nichols didn't tell firm he paid $28,000 to settle a customer's complaint.

The Financial Industry Regulatory Authority Inc. has fined former Morgan Stanley broker Eric Nichols $5,000 and suspended him for 15 days over his settlement of a customer complaint.

In September and October 2018, Mr. Nichols wrote two checks totaling approximately $28,000 to a client to settle the client’s complaint about investments in a preferred stock. In July 2018, the issuer of the stock suspended its dividend payment and in August the client complained to Mr. Nichols, verbally and in writing, about the dividend suspension as well as about unrealized losses the client had incurred.

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Although Morgan Stanley was aware of the client’s complaint, Mr. Nichols did not disclose to the firm that he had written checks to settle it, Finra said in a letter of acceptance, waiver and consent. Morgan Stanley discharged Mr. Nichols in March “based on allegations that he may have executed some transactions for nondiscretionary client accounts without confirming the transactions directly beforehand in all cases” and because he “reimbursed one client directly for an account-related issue.”

Mr. Nichols began his career in 1996 at H&R Block Financial Advisors and joined Morgan Stanley in 2009 after eight years with Citigroup. He is currently employed at a Finra member firm in a nonregistered capacity.