Galvin slaps Morgan Stanley with censure, $200,000 fine over ex-broker's churning

Galvin slaps Morgan Stanley with censure, $200,000 fine over ex-broker's churning
State regulators say the firm did not adequately monitor Justin Amaral's trades.
OCT 30, 2019
Secretary of the Commonwealth of Massachusetts William Galvin has censured Morgan Stanley and ordered the firm to pay a $200,000 administrative fine and provide $182,000 in restitution to four investors in the state who lost money due to Morgan Stanley's failure to supervise one of its brokers, the state's securities division said in a release. [More: Morgan Stanley adding 401(k) participant services to boost wealth business] According to state regulators, former Morgan Stanley broker Justin E. Amaral of Boston repeatedly engaged in churning of certain investor accounts. It said that most alerts on Mr. Amaral's accounts were closed out after he stated that the excessive trades were the result of poor performance in the market or account rebalancing, which securities regulators said show that the firm's supervisors failed in their duty to monitor the broker's trading activity. [Recommended video:​ Social Security COLA not great news for 2020, says Mary Beth Franklin] According to the consent order, Morgan Stanley did not open an investigation into Mr. Amaral's activities until a customer's accountant filed a complaint in April 2014 after discovering that Mr. Amaral was designated as the executor of the customer's estate and as a beneficiary in the customer' will. Mr. Amaral had not disclosed the relationship to Morgan Stanley, and the firm discharged him in May 2014. The firm's investigation uncovered several issues relating to the broker's trading activities. Several clients filed complaints against Mr. Amaral for excessive trading, which Morgan Stanley resolved on a case-by-case basis. Register today for our Future of Financial Advice event on Nov. 20.

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