On January 4, 2009, the Securities Exchange Commission (SEC) announced the settlement of the matter instituted against William Keith Phillips on July 20, 2009. Pursuant to the settlement, the Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order pursuant to Sections 203(f) and 203(k) of the Investment Advisers Act and Section 15(b) of the Securities Exchange Act of 1934 against William Keith Phillips. On July 20, 2009, the SEC instituted and settled proceedings against Morgan Stanley & Co. Incorporated, Rel. 34-60342.
The Order finds that from 2000 through 2006, Phillips worked as a financial adviser at Morgan Stanley, which provided investment advisory services to clients through its Consulting Services Group. During the relevant time period, Morgan Stanley’s disclosure materials described the advisory services it provided which included assisting clients in identifying money managers to manage clients’ assets. Morgan Stanley disclosed the detailed due diligence process it followed to select and approve money managers for participation in the firm’s managed account program. According to its disclosure materials, Morgan Stanley financial advisers selected money managers from this approved list of managers to recommend to clients based on the client’s investment profile and objectives.
The SEC found that contrary to Morgan Stanley’s disclosures, William Keith Phillips recommended to certain advisory clients three money managers who were not approved for participation in Morgan Stanley’s advisory programs and had not been subject to the firm’s due diligence review. This fact was not disclosed to Phillips’ clients. The SEC further found that Phillips had undisclosed relationships with the unapproved money managers he recommended to his advisory clients and that he and Morgan Stanley received substantial brokerage commissions and/or fees from them. Thus, the SEC found that Phillips made misrepresentations about the firm’s money manager recommendation process to his clients and failed to ensure that the conflicts of interest inherent in his recommendations were disclosed to clients. Based on the above, the SEC found that Phillips willfully aided and abetted and caused Morgan Stanley’s violations of Section 206(2) of the Advisers Act.
Pursuant to the Order, the SEC ordered Phillips to cease and desist from committing or causing any violations and any future violations of Section 206(2) of the Advisers Act and suspended him from association with any investment adviser, broker, or dealer for four months, and ordered him to pay a civil monetary penalty in the amount of $80,000. Phillips consented to the issuance of the Order without admitting or denying any of the findings in the Order.
According to his FINRA Broker Report (CRD), William Keith Phillips is currently employed with Wiley Bros.-Aintree Capital, LLC. Prior to being employed by Wiles Bros.-Aintree Capital and Morgan Stanley, Phillips was a registered representative with Painewebber and Shearson Lehman. Phillips’ CRD also indicates that in addition to the SEC’s investigation, he has also been named in at least three customer disputes related to possible securities fraud.
If you have any questions about investments you made with William Keith Phillips, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak with a securities attorney please call our Chicago office at 312-238-9650 for a free consultation.
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