Morgan Stanley Lawsuit – Clients awarded $519,000 for Alleged Unsuitable Investments
According to a FINRA Award posted this week, a New Mexico couple claiming they were put into unsuitable investments by a Morgan Stanley financial advisor were awarded $519,000.
The investors, Stephen and Brenda Balok, in a lawsuit filed in 2016, alleged that Morgan Stanly engaged in deceptive trade practices, negligent misrepresentation and supervision and breaches of fiduciary duty and contract that resulted in losses in eight of their accounts held with the broker-dealer, according to the arbitration award document.
According to FINRA, the couple claimed they were persuaded to buy complex instruments such as individual junk bonds, option contracts and ETFs that invested in derivatives and futures.
The FINRA arbitration panel ordered Morgan Stanley to pay $519,089 in compensatory damages plus 8.75% annual interest starting from April 5, 2019 until paid in full, according to the document. The panel also denied Morgan Stanley’s request to expunge the record of the broker, who was identified in the award document as “Prouty.”
According to FINRA BrokerCheck, Timothy John Prouty has been registered with Morgan Stanley in Albuquerque, N.M., since 2009.
He has one pending customer dispute on his record from December 2016 alleging “unsuitability with respect to investments in managed accounts” from July 2012 to June 2015.
Failure to Supervise
Brokerage firms are required to properly supervise their advisors. They must ensure that those advisors are complying with applicable rules and regulations. If it can be demonstrated that Morgan Stanley failed to properly supervise its representatives, the firm may be held responsible for investment losses in a FINRA arbitration claim.
If you have questions or concerns regarding investments made with Morgan Stanley, the securities attorneys of The White Law Group may be able to help. For a free consultation with a securities attorney, please call 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.