FINRA Fines Morgan Stanley Smith Barney LLC $1 Million Due to Alleged Supervisory System Failures

Soreide Law Group, a Securities Arbitration Law Firm, (888) 760-6552, obtained the following summation of information on FINRA’s website under “Disciplinary and Other FINRA Actions, September, 2014.”

Morgan Stanley Smith Barney LLC (CRD #149777, Purchase, New York)

was censured, fined $1,000,000, and required to conduct a review of their systems and written procedures which are used to supervise its Former Financial Advisor Program (FFAP) or similar program involving the payment of commissions to retired representatives.

FINRA alleges that Morgan Stanley Smith Barney LLC failed to establish, maintain and enforce written procedures to supervise the payment of continuing commissions to retired representatives.

FINRA's findings stated that Morgan Stanley Smith Barney LLC paid more than $100 million in commissions to former retired registered representatives. Several of the individuals were not registered or associated with a registered firm at the time of the payments.

FINRA's findings also stated that Morgan Stanley Smith Barney LLC did not have a section of its WSPs that addressed the payment of continuing commissions under the FFAP, nor did Morgan Stanley Smith Barney LLC have any method for supervising these payments. The certifications and letters that Morgan Stanley Smith Barney LLC failed to maintain were necessary to comply with the terms of the 2008 No-Action Letter, and were necessary to permit Morgan Stanley Smith Barney LLC to detect whether the retired representatives were acting as unregistered brokers.
(FINRA Case #2011029683301)
This ends the information obtained from FINRA’s website.

The Soreide Law Group represents clients nationwide before FINRA. If you have investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation with an attorney on how to potentially recover those losses: 888-760-6552.