Morgan Stanley hit with $2.4mn penalty by FINRA
Morgan Stanley has been ordered to pay $2.4mn to a group of doctors in Mississippi by a FINRA arbitration panel, after it found that one of the bank's brokers had "repeatedly been accused of mishandling investments". The group are the latest clients to be awarded a monetary judgement after accusing the broker of unauthorized and excessive trading.
A Finra arbitration panel has ordered Morgan Stanley to pay at least $2.4 million in the latest round of claims by clients of a former Mississippi broker who has repeatedly been accused of mishandling investments, .

A group of physicians and their family members were the latest clients to be awarded a monetary judgment after accusing former Morgan Stanley broker Steven Mark Wyatt of unauthorized and excessive stock-market trading they say cost them money during and after the 2008 financial crisis.

Mr. Wyatt purchased thinly-traded stocks for his clients that he himself owned, while also loading up his clients’ portfolios with speculative bets on exchange-traded funds and other securities, according to a lawyer for the clients who brought the case, Joseph C. Peiffer at Peiffer Rosca Wolf Abdullah Carr and Kane.

The panel decision — dated July 24 and released by the Financial Industry Regulatory Authority Inc. — is the latest in a series of claims against Mr. Wyatt and his firm and managers at his Ridgeland, Miss., branch.

Four previous cases involving Mr. Wyatt have been settled or resolved in a similar fashion without an admission of guilt. He’s been found liable in two additional cases. Two more cases are pending, according to regulatory filings.

“We’re not done with this guy,” said Mr. Peiffer, the physicians’ lawyer, who is based in New Orleans. “There were failures at every level of leadership.”

He said Morgan Stanley failed to see warning signs, including unauthorized trading.

Mr. Wyatt was discharged from Morgan Stanley in 2012 and hasn’t worked as a U.S.-registered broker since, according to his BrokerCheck report. His lawyer, George C. Freeman III of New Orleans-based Barrasso Usdin Kupperman Freeman and Sarver, did not respond to a request for comment.

The other named Morgan Stanley employees in the case — branch manager Fred Eugene Brister III and adviser Hilary Zimmerman, who carries the title senior vice president — continue to work at the branch, according to a Morgan Stanley employee directory available online.

Margaret G. Draper, a spokeswoman for New York-based Morgan Stanley, said in a statement that the investors who brought the claim were “a group of experienced and sophisticated investors who were awarded only a portion of the damages they claimed to have incurred in pursuing an aggressive, growth strategy in their accounts during the 2008 market crash and following volatile time period.”

The physicians’ claim had asked for $4.43 million plus interest, fees and other costs. Morgan Stanley will pay fees and interest in addition to the $2.4 million judgement.

“Morgan Stanley takes its responsibilities to its customers seriously and respectfully disagrees with the arbitrators’ decision,” the statement read.