The Financial Industry Regulatory Authority (FINRA) announced on November 4, 2019 that it issued a $10,000 fine and a suspension to Morgan Stanley securities broker Simon Joseph (CRD#: 5602157, Alexandria, Virginia). It appears from a Letter of Acceptance, Waiver, and Consent (“AWC”) which Joseph and FINRA executed in October 2014 that he violated FINRA rules by making discretionary trades without written authorization and by falsifying Morgan Stanley’s books and records. Here’s a summary of the allegations against Joseph resulting in his suspension:
FINRA Alleges That Simon Joseph Traded Without Authorization
First of all, the AWC says that Simon Joseph violated NASD Rule 2510(b). This rule is designed to prevent securities representatives from making unauthorized trades in investor accounts. For a securities representative to exercise discretion (e.g. determine which trades to make and when to make them without needing confirmation from the client each time), this rule requires that the client first provide written authorization. Also, the securities firm has to “accept” the client’s account before the securities representative can make discretionary trades.
Allegedly, 5 of Simon Joseph’s Morgan Stanley clients did not give him written permission to exercise discretion in their accounts. Nevertheless, Joseph made roughly 2,200 trades in the 5 clients’ accounts using discretion. FINRA also said that Joseph did not ask Morgan Stanley if he could exercise discretion. Because of this, Morgan Stanley did not accept the accounts.
Joseph Allegedly Mismarks Morgan Stanley Clients’ Trades As “Unsolicited”
Secondly, the AWC reports that Simon Joseph violated FINRA Rule 4511. This rule is designed to prevent securities representatives from causing the securities firm to hold inaccurate books and records. Also, federal securities laws and SEC rules require that the firms keep accurate records of brokerage orders.
Here, Simon Joseph mismarked 126 trades by stating that he did not solicit them. However, it appears that Joseph solicited the trades that he mismarked. Not only that, but Joseph solicited trades which he was not allowed to solicit per Morgan Stanley policy. Allegedly, he solicited trades that Morgan Stanley rated as “underweight,” and seemingly traded ahead of one or more clients. For the foregoing reasons, Morgan Stanley disaffiliated with Simon Joseph after approximately 7 years.
Morgan Stanley Client Alleges That Simon Joseph Made Unauthorized Trades
A client of Morgan Stanley brought a formal dispute about Simon Joseph in September 2016. Namely, the client alleged that Joseph made unauthorized trades. Allegedly, trades Joseph placed from 2015 to 2016 caused the client to experience losses. For this reason, Morgan Stanley opted to pay the client $70,000 to settle the matter.
Simon Joseph’s suspension is effective November 4, 2019 until December 16, 2019. Have you experienced losses by investing with Joseph, who now works for BB&T in Alexandria, Virginia? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The law firm has recovered millions of dollars for clients who have suffered losses due to misconduct of brokers and brokerage firms.