Investors of Vincent Sciabica may have recourse for their losses. A recent regulatory action has revealed wide-spread negligence and possibly fraud in the accounts Sciabica’s investors. If you are such an investor please call 1-866-817-0201 for a free and confidential consultation.
Regulators allege that during the period he was employed by Morgan Stanley, Vincent Sciabica engaged in an unsuitable pattern of short-term trading of UITs in approximately 360 customer accounts. Sciabica entered into a settlement with regulators where he did not deny or confirm these allegations.
UlTs are investment companies that offer shares of a fixed portfolio of securities in a one-time public offering, and terminate on a specified maturity date. As such, they are not designed to be used as trading vehicles. In addition, UlTs typically carry significant upfront charges, and as with mutual funds that carry front-end sales charges, short-term trading of UITs is generally improper. Trading of these investments is unwise because of the cost, but can unreasonably enrich the broker who recommends such a strategy.
During the period when he was employed by Morgan Stanley, in connection with these customer accounts, Sciabica repeatedly recommended that the customers purchase UlTs and then sell these products before their maturity dates. The majority of the UlTs that Sciabica recommended had maturity dates of at least 24 months and carried sales charges. Nevertheless, Sciabica continually recommended that his customers sell their UIT positions less than a year after purchase.
In addition, on more than 1,000 occasions, Sciabica recommended that his customers use the proceeds from the short-term sale of a UIT to purchase another UIT with similar investment objectives. Sciabica’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.
Sciabica left his employ with Morgan Stanley in 2014 while Morgan Stanley was investigating this wrongdoing. The investigation of the Financial Industry Regulatory Authority (FINRA) began in November 2017.