Morgan Stanley Clients Who Suffered Losses in Non-traditional ETFs Could Recover Losses

by InvestorLawyers on September 3, 2013

in Arbitration,ETF,FINRA,Morgan Stanley,Securities Fraud,Suitability

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses in exotic ETFs, or exchange-traded funds, sold by Morgan Stanley. Recently, Morgan Stanley was ordered to pay $100,000 for its alleged improper sales practices of exotic ETFs to investors. According to New Jersey state regulators, Morgan Stanley did not properly train its advisers, who then sold leveraged and inverse exchange-traded funds to seniors desiring additional income. 

Morgan Stanley Clients Who Suffered Losses in Non-traditional ETFs Could Recover Losses

Reportedly, the improper sales took place from January 2007 until June 2009. The $100,000 payment includes $10,000 for investor education, $25,000 for investigative expenses of the state and $65,000 in civil penalties. Morgan Stanley has apparently already paid New Jersey investor restitution in the amount of $96,940. However,  investors who suffered significant losses in unsuitable ETFs can still file a securities arbitration claim to recover losses.

In 2012, Morgan Stanley settled FINRA allegations regarding the firm’s handling of exchange-traded funds by paying almost $2.4 million. Reportedly, Morgan Stanley did not have an adequate supervisory system or written procedures in place to ensure compliance with NASD and FINRA rules for inverse and leveraged ETFs from January 2008 until January 2010. Allegedly, Morgan Stanley used the same procedures for oversight of the non-traditional ETFs as they did for traditional ETFs. In addition, investment fraud lawyers say Morgan Stanley-registered representatives did not completely comprehend the non-traditional ETF investments because the firm did not properly train them.

If you suffered significant losses as a result of your investment in non-traditional exchange-traded funds with Morgan Stanley, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.

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