Morgan Stanley Ordered to Pay $500k in Arbitration Ruling

New Mexico Couple Awarded Damages for Claims Including Unsuitability and Breach of Fiduciary Duty

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Morgan Stanley (CRD# 149777) is a brokerage and investment advisor firm with its main address in Purchase, New York, with licenses in all 50 states. On May 17, 2019, a FINRA arbitration panel issued a final disposition ordering the firm to pay $519,089 in damages plus 8.75% interest annually starting April 5, 2019.

The claimants, a couple from New Mexico, alleged unsuitability, deceptive trade practices, breach of fiduciary duty, negligent misrepresentation, breach of contract, negligent supervision, control person liability, and respondeat superior (firm liability for broker’s actions) (Award, FINRA Office of Dispute Resolution, Case №12–03473).

Although the claim was originally filed in 2016, a final disposition was not entered until this year. According to the case summary in the award document, the claimants alleged losses in eight accounts held by Morgan Stanley.

The losses allegedly occurred as a result of participation in an investment advisory program, the purchase of individual junk bonds, exchange-traded funds in derivatives and futures contracts, and option contracts.

In its response, Morgan Stanley denied the allegations and requested that the record of one of its brokers, who was not named as a party in the arbitration, be expunged.

Timothy John Prouty (CRD# 4928098) is a broker and investment advisor currently with Morgan Stanley based in Albuquerque, New Mexico, which was also the site of the arbitration hearings. Mr. Prouty’s BrokerCheck profile does not contain any disclosures other than this customer dispute.

Morgan Stanley has a total of 134 disclosures in its detailed report, including 46 regulatory events and 88 arbitrations.

Jeffrey R. Sonn is an investment lawyer with more than three decades of experience. If you lost money investing in Woodbridge securities, he is prepared to help. Call Mr. Sonn today at (305) 912–3000 to set up a free review of your case.

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