Morgan Stanley Ordered to Pay $11.7 Million Over Unauthorized Covered Call Strategy

Posted on December 13th, 2022 at 3:16 PM
Morgan Stanley Ordered to Pay $11.7 Million Over Unauthorized Covered Call Strategy

From the Desk of Jim Eccleston at Eccleston Law.

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Morgan Stanley to pay a former client $11.7 million over an allegedly unauthorized call options strategy.

The arbitration award includes $11.5 million in compensatory damages as well as $158,000 in costs, according to the award. The former client filed his arbitration claim in August 2021 alleging that the firm failed to supervise sales of covered calls on large technology holding companies, including Nvidia Corp., Tesla Motors, Apple, Salesforce, and Microsoft Corp. Nowak initially sought tens of millions in damages constituting “lost opportunity” or foregone gains after the shares were called away between 2018 and 2021.

The firm “strongly disagrees with the award” and is evaluating its options, including whether it could ask the court to overturn the decision, according to a Morgan Stanley spokesperson. The advisor, Craig Thistlethwaite, was an unnamed party in the arbitration and the arbitration panel denied Morgan Stanley’s request for expungement of the matter from Thistlethwaite’s record. Nowak additionally pursued sanctions against Morgan Stanley for allegedly failing to preserve evidence as it did not keep text messages between Nowak and Thistlethwaite. The firm’s defense, that the messages were on personal phones because Nowak and Thistlethwaite were “close friends”, apparently fell on deaf ears as securities rules and regulations nonetheless require firms to adopt supervisory systems to monitor, detect and prevent such communications.

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

Tags: eccleston, eccleston law, advisors, law, morgan stanley, finra

Return to Archive

TESTIMONIALS

Previous
Next

Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.

LATEST NEWS AND ARTICLES

April 17, 2025
SEC Charges Hedge Fund Founder with Fraud in $4 Million Scheme

The Securities and Exchange Commission (SEC) has charged Alan Burak, founder of Never Alone Capital LLC, with orchestrating a fraudulent investment scheme that raised approximately $4 million from investors.

April 16, 2025
GWG Bondholders Offered Settlement Worth Just Cents on the Dollar

Distressed investors who purchased $1.6 billion in GWG L bonds may soon receive a small fraction of their original investment under a proposed settlement.

April 15, 2025
Stifel Ordered to Pay $133 Million in FINRA Arbitration

Stifel Financial’s retail broker-dealer must pay nearly $133 million in damages following a FINRA arbitration tied to Miami-based advisors' structured note strategy.