FINRA Homes in On Rogue Broker Supervisory Failures

Posted on August 7th, 2015 at 4:18 PM
FINRA Homes in On Rogue Broker Supervisory Failures

From the Desk of Jim Eccleston at Eccleston Law LLC: 

FINRA has reached a $1 million settlement with Morgan Stanley Wealth Management and Scottrade Inc. Both brokerage firms allegedly had holes in their compliance systems which allowed brokers to improperly move funds without causing suspicion. Neither company admitted to or denied the charges, but both agreed to the sanctions.

Brad Bennett, FINRA’s Chief of Enforcement, stated “Morgan Stanley and Scottrade had been alerted to significant gaps in their systems by Finra staff, yet years went by before either firm implemented sufficient corrective measures.”

While a Scottrade spokesman stated that the firm began to update its procedures in 2013, Morgan Stanley could not be reached for comment.

For financial firms, rogue brokers are a constant concern. To prevent illegal activity, firms are required to have capable supervisory systems and procedures. Morgan Stanley’s preventative systems lacked effectiveness. According to FINRA, from inadequate identification requirements to transfer reviews, the firm was not doing enough to prevent forgery and money fraud.

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

Tags: Eccleston Law LLC, James Eccleston, eccleston, Eccleston Law, FINRA, Morgan Stanley, Scottrade Inc.,

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Thank you for your professional assistance with this matter. You are very good at what you do.

John T.


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