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Morgan Stanley Broker Allegedly Traded on Customer Accounts without Permission

Investment fraud lawyers are currently investigating claims on behalf of customers of Morgan Stanley and other full-service brokerage firms who were the victim of unauthorized trading or discretionary trading on a non-discretionary account without receiving prior written authorization.


According to FINRA’s discretionary rule, “No member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member, as evidenced in writing by the member or the partner, officer or manager, duly designated by the member, in accordance with Rule 3010.” However, according to securities arbitration lawyers, this rule doesn’t stop all brokers.

As an example, James Harman McNeill, a Morgan Stanley broker, recently was cited for unsolicited trades and discretion. Allegedly, McNeill violated FINRA Rule 2010 in November 2011 when he exercised discretionary power in Morgan Stanley customer accounts without receiving written authorization prior to doing so. Furthermore, later that month McNeill allegedly marked non-traditional Exchange Traded Fund purchase orders as “unsolicited” even though they were solicited, according to the allegations listed in the Letter of Acceptance, Wavier and Consent that was submitted in March of this year. The Financial Industry Regulatory Authority imposed a 9-month suspension and a $15,000 fine upon McNeill. According to investment fraud lawyers, mis-marked tickets can raise issues regarding inaccurate books and determining if a broker made an unsuitable recommendation.

According to a recent article in Forbes, “not every example of unauthorized trading or mis-marked tickets can be ascribed to time pressure and fatigue. Frequently, bad folks are simply up to no good. Similarly, some folks just won’t listen to reason and no matter how often you warn certain registered persons to avoid shortcuts and go by the book, they figure it’s their lucky day and who’s gonna know and who’s gonna find out — and that’s exactly when bad goes to worse.”

If you believe your stockbroker or investment advisor executed trades on your non-discretionary account without your permission, 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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