Massachusetts state officials have charged Morgan Stanley with “dishonest and unethical conduct,” saying it ran high-pressure sales contests.
These alleged contests in Massachusetts and Rhode Island focused on the sales of securities-based loans (SBLs). Authorities said clients were allowed to borrow against the value of the securities in their investment accounts with their securities as collateral.
Allegedly, 30 financial advisors in the Springfield, Wellesley, Worcester and Waltham offices, and in the Providence, Rhode Island office, were involved.
The contests offered advisors incentives of $1,000 for 10 loans, $3,000 for 20 loans and $5,000 for 30 loans. According to officials, this created a conflict of interest. Allegedly, these contests involved a high degree of pressure on the participants because a manager tracked the performance of the advisors and the private bankers taking part in the contest.
The initial sales contest nearly tripled the SBL accounts opened the year before the contest and generated nearly $24 million in new loan balances, according to the complaint. However, even after the contest was detected, no steps were taken to stop it, and a new sales contest began in 2015 and ran until April, of 2015, according to the complaint.
Morgan Stanley said it strongly objects to the allegations and will defend itself.
The charges come one month after Wells Fargo was fined for fraudulently opening accounts and illustrates how banks are facing increased scrutiny over their sales practices.
If you feel you have been a victim of aggressive sales practices by Morgan Stanley or another broker/dealer, and you have incurred losses due to their recommendations, call Soreide Law Group for a no-cost consultation with an attorney regarding the possibility of recovering your investment losses at: 888-760-6552.
Soreide Law Group operates on a contingency fee and represents our clients nationally.