FINRA Fines & Suspends Former Morgan Stanley Broker in Jackson Office
BY Investment Fraud Attorney
September 16, 2014
Reprinted from Jackson Jambalaya Tuesday, September 16, 2014
FINRA fined former Morgan Stanley broker Steven Wyatt $12,500 and suspended him for four months in a consent agreement issued last July.* The agreement states Mr. Wyatt purchased shares of Morris Innovative, a medical device company, without his employer’s knowledge and then secretly directed several Morgan Stanley clients to invest their money in the same company.
The order states Mr. Wyatt purchased $58,750 (43,518 shares) in the company in October 2009 and February 2010. Mr. Wyatt, however, purchased the shares in his wife’s name. Mr. Wyatt did so without notifying Morgan Stanley of his private stock-trading activities- a big no-no in the world of FINRA and securities regulation. Mr. Wyatt also used his personal Yahoo email account to recommend purchasing shares of the company instead of using his Morgan Stanley email account. The order states the applicable regulation:
NASD Rule 3040(b) requires associated persons to provide written notice to their member firm employer “prior to participating in any private securities transaction.” The term “private securities transaction,” as defined in NASD Rule 3040(e)(1), means any security transaction outside the regular course or scope of an associated person’s employment with a member, and applies to both sales and purchases of securities.
Mr. Wyatt brought four of his clients to a meeting with company representatives. Mr. Wyatt naturally promised “an overwhelming rate of return”. Morgan Stanley fired Mr. Wyatt after the allegations were raised. The FINRA website reports other claims and awards against Mr. Wyatt:
- July 22, 2014: Pending customer dispute. Customer requests $647,037 in damages. Alleged breach of fiduciary duty to client’s account.
- July 26, 2013: Pending customer dispute. Customer requests $1,279,340 in damages. Alleged misrepresentation of investments in client’s account.
- July 13, 2013: Pending customer dispute. Customer requests $2,305,673 in damages. Alleged misrepresentation of investments in client’s account.
- April 16, 2013: $440,000 awarded to customer. Requested $1,724,666.
- March 19, 2013: Pending customer dispute. Alleged misrepresentation of investments in client’s account.
- June 26, 2102: Pending customer dispute. Customer requests $4,429,613 in damages. Alleged churning.
- January 4, 2012: $150,985 awarded to customer. Customer requested $1 million in damages. Alleged churning.
- February 26, 2012: $387,856 awarded to customer. Customer requested $2,697,566 in damages. Alleged churning.