Elderly woman awarded more than $1M in churning case against ex-Morgan Stanley broker

A Financial Industry Regulatory Authority Inc. arbitration panel awarded more than $1 million to an elderly woman who claimed she was ripped off by a former Morgan Stanley broker. Arbitrators recently found in favor of Genevieve Lenehan, 92, giving her punitive and compensatory damages, attorneys' fees, and other costs that amounted to $1.06 million. Ms. Lenehan asserted that a former Morgan Stanley broker, Justin Amaral, both churned and reverse-churned her account. Mr. Amaral was a financial adviser to Ms. Lenehan and her husband, who died five years ago. When Mr. Lenehan died, Mr. Amaral allegedly began a systematic investment strategy in which he bought and sold closed-end funds and initial public offerings to generate fees, according to Ms. Lenehan's attorney, Robert Jutras, a partner at Sheehan, Schiavoni, Jutras & Magliocchetti. In addition, Mr. Amaral moved into a wrap account thousands of shares of General Electric stock that Ms. Lenehan had accumulated while working as a secretary at the manufacturing firm, beginning during World War II. By putting them in a wrap account, Mr. Amaral could charge a fee on shares that she had no intention of selling and that had been sitting in a lock box in her basement, according to Mr. Jutras. Mr. Jutras said Mr. Amaral also liquidated and acquired annuities for Ms. Lenehan by forging her signature. The broker made these moves without Ms. Lenehan's knowledge or consent and without appropriate supervision from Morgan Stanley, Mr. Jutras said. The Finra arbitrators held Mr. Amaral and Morgan Stanley jointly liable for violations involving Ms. Lenehan's accounts. “We are disappointed in the award,” said Morgan Stanley spokesman James Wiggins. He declined to comment further. A lawyer for Mr. Amaral was not immediately available for comment. Mr. Amaral voluntarily resigned from Morgan Stanley in May 2014 amid allegations in a separate case regarding his work as an executor and beneficiary of a client's estate. He was barred from the securities industry on June 19 after failing to testify at a Finra hearing. “She never was and never will be a sophisticated investor,” Mr. Jutras said. “But she is an extraordinarily lovely, honest and hard-working woman. Mrs. Lenehan and the legal team are hopeful that this legal-fee and punitive-damage award will send a message to the financial industry that it is more important to invest in compliance training than to treat punitive damages as a cost of doing business.”