Former Morgan Stanley Advisor Sanctioned for Undisclosed Hotel Business

Posted on January 7th, 2025 at 4:20 PM
Former Morgan Stanley Advisor Sanctioned for Undisclosed Hotel Business

From the desk of Jim Eccleston at Eccleston Law

FINRA has fined Chris S. Stocks, a former Morgan Stanley advisor, $10,000 and suspended him for 30 days for failing to disclose his involvement in a hotel business. Stocks, who spent over 25 years at the wirehouse, engaged in outside business activities without obtaining prior approval from his firm, as reported by AdvisorHub.

A FINRA acceptance, waiver, and consent letter finalized on Wednesday revealed that Stocks created four holding companies in 2017 to facilitate the purchase and operation of a Quality Inn hotel in Denver. Over the course of three years, he was involved in hiring, contract negotiations, and hotel management, expecting to share in the business’ profits. Under FINRA rules, advisors are required to disclose and obtain firm approval for any outside activity with a reasonable expectation of compensation.

Stocks falsely certified on Morgan Stanley’s annual compliance questionnaires in 2019 and 2020 that he had disclosed all outside business activities. He did not inform the firm about his involvement in the hotel until September 2020. Morgan Stanley subsequently terminated Stocks in December 2021, citing concerns about his undisclosed business activity.

FINRA launched its investigation after Morgan Stanley filed a U-5 termination notice. Stocks accepted the sanctions without admitting or denying FINRA’s findings.

According to AdvisorHub, Stocks joined Morgan Stanley Dean Witter in 1995 and now operates Stocks Wealth Management under Prospera Financial, where he registered shortly after his termination. BrokerCheck indicates that Stocks currently has eight approved outside business activities, including ventures in hospitality, real estate, and a car dealership.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory and disciplinary matters.

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