The
Financial Industry Regulatory Authority Inc. has
barred the former manager of Morgan Stanley's Palm Harbor, Fla., office from working in a supervisory capacity and fined him $75,000 for failing to supervise a broker who churned the account of an elderly client who was the
founder of the Home Shopping Network.
Finra said that Terry McCoy, who left Morgan Stanley in 2016 after 17 years with the firm, failed to supervise Ami Forte and another broker, who "used discretion without proper authorization to excessively and unsuitably trade six" of Roy M. Speer's accounts.
"This included placing well over 2,000 trades in the six accounts in a wide assortment of complex corporate and municipal bonds. In many instances, the trading activity included moving in and out of positions in the same bond in a matter of a few weeks or months," Finra said in a letter of acceptance, waiver and consent.
As a result of the excessive trading, Mr. Speer's accounts generated commissions of over $9 million from September 2011 through July 2012.
During that time period, Mr. Speer, who died in August 2012, was suffering from various physical ailments and dementia. He was declared legally incompetent by a Florida court in July 2012.
Finra said that while Mr. McCoy met regularly with Mr. Speer and was well aware of his deteriorating condition, he did nothing to stop the excessive trading. Finra also noted that during the period in question, Mr. McCoy failed to detect that at least 300 trades that were entered less than five minutes after being proposed by the trading desk.
In March 2016, a Finra arbitration
panel awarded $34 million to the estate of Mr. Speer, finding that Ms. Forte, Mr. McCoy and Morgan Stanley were jointly liable for unauthorized trading, breach of fiduciary duty/constructive fraud, negligence, negligent supervision and unjust enrichment. The arbitrators also found that Morgan Stanley violated a Florida law against exploitation of vulnerable adults.
Ms. Forte, who was alleged to be in a relationship with Mr. Speer, was fired by Morgan Stanley a few days after the arbitration award was announced.
Ms. Forte is now registered with
Pinnacle Investments.
