Finra arbitrators ordered Morgan Stanley to pay a senior investor $1.8 million for weighting too much of her portfolio in a single stock — WisdomTree Investments Inc.
From August 2011 to July 2020, Karen Busch worked with Morgan Stanley broker Todd Wachsman in the firm’s Garden City, New York, office. During that time, Wachsman was a particular fan of WisdomTree, an exchange-traded funds provider. Wachsman, who is Busch’s nephew, was not named as a respondent in the arbitration claim.
The “vast majority” of Busch’s portfolio was allocated to WisdomTree, said her attorney, Matthew Plant, a partner at Lax & Neville. The average price of the stock was $5.25 in 2011. The average price hit $16.17 in 2015, but fell to $3.46 in 2020.
Busch, who is now in her late 70s, filed a Finra arbitration claim in January 2021 seeking $1.6 million in compensatory damages. She asserted fraud, breach of contract, unjust enrichment, violation of industry rules, suitability and failure to supervise, among other causes of action.
A unanimous panel of three Financial Industry Regulatory Inc. arbitrators held Morgan Stanley liable and awarded Busch $1.8 million in compensatory damages, according to the Monday award.
“We’re very happy with the award,” Plant said.
The arbitrators gave Busch more in damages than she sought because they considered the opportunity costs she had by having been tied up in an unsuitable stock over a number of years.
“She was out of the market in an otherwise good market cycle,” Plant said.
Morgan Stanley disagreed with the arbitrator’s decision.
“Morgan Stanley is disappointed with the award as the client was advised multiple times by the firm about the concentrated position at issue,” Susan Siering, a Morgan Stanley spokesperson, wrote in an email.
Wachsman continues to work at Morgan Stanley’s Garden City office, according to his BrokerCheck record. His only customer dispute is the one filed by his aunt. It will remain on his record because the Finra arbitrators denied his expungement request.
“When wrongdoing like this occurs, the public should know about it,” Plant said. “Expungement in these circumstances would not be appropriate.”
"QuantumRisk, by design, recognizes that these so-called “impossible” events actually happen, and it accounts for them in a way that advisors can see and plan for," Dr. Ron Piccinini told InvestmentNews.
Advisors who invest time and energy on vital projects for their practice could still be missing growth opportunities – unless they get serious about client-facing activities.
The policy research institution calculates thousands in tax cuts for Washington, Wyoming, and Massachusetts residents on average, with milder reductions for those dwelling in wealth hotspots.
Yieldstreet real estate funds turned out to be far riskier than some clients believed them to be, according to CNBC.
The race to 100 transactions ended a month early this year, with April standing out as the most active month on record for RIA dealmaking.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
