What You Need to Know
- An arbitration panel ordered Morgan Stanley to pay $160,000 in damages to a client who alleged the firm was guilty of negligence and failing to supervise an ex-rep.
- The ex-rep was ordered to pay the same amount. Both he and Morgan Stanley were also ordered to pay the client $10,000 in legal fees.
- Merrill Lynch, for which the ex-rep previously worked, was also named in the complaint but was found liable.
Morgan Stanley must pay $160,000 in compensatory damages to a client who alleged the firm was guilty of negligence and failing to supervise a former broker over the trading of unspecified securities in the client’s account, according to an arbitration award posted on FINRA’s website on Thursday.
A three-person panel of public arbitrators in Phoenix, Arizona, agreed that the wirehouse was liable for those actions but not for other allegations made by the client.
The panel also ordered the former Morgan Stanley broker, Francisco Javier Valenzuela, to pay $160,000 to the client, Carlos Ramon Tapia Sanchez, saying he was liable for misrepresentation, manipulation and fraud. He served as a broker for Morgan Stanley from 2015-2018, according to FINRA’s BrokerCheck website. He is not currently registered as a broker or advisor, according to BrokerCheck.
Valenzuela and Morgan Stanley are also “jointly and severally liable for and shall pay” the client $10,000 in attorneys’ fees, pursuant to the FINRA Dispute Resolution Services Arbitrator’s Guide.
The claimant had also named Merrill Lynch as a respondent. Valenzuela had served as a broker for that company from 2010-2015, according to BrokerCheck. But the arb panel didn’t order Merrill to pay the client anything.
Merrill, Morgan Stanley and Burt Newsome, the claimant’s attorney, did not immediately respond to requests for comment on Friday.