Securities Fraud and Mismanagement

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Regulators barred Morgan Stanley broker Fernando Silva from the securities industry on December 6, 2022. FINRA, the Financial Industry Regulatory Authority, the regulatory agency that oversees securities brokerages, entered into a settlement with Mr. Silva to reach this punishment. The FINRA investigation started after Morgan Stanley reported to the regulator that Silva had misappropriated client funds. FINRA filed suit against Silva, an Arizona securities broker in 2022.

This settlement happened after Silva’s relatively short relationship with Morgan Stanley. Though the relationship was short, Morgan Stanley is ultimately responsible for losses occurring due to Silva’s actions.

From August 2021 through September 2022, Silva was registered with FINRA as a General Securities Representative (“securities broker”) through an association with Morgan Stanley. On September 23, 2022, Morgan Stanley filed a
Uniform Termination Notice for Securities Industry Registration (Form U5). A Form U5 is the form a brokerage is required to file with regulators when one of its brokers is discharged. The Form U5, written and submitted by Morgan Stanley, stated that Morgan Stanley had “concerns that Silva had misappropriated client funds.”

FINRA Rule 8210(a)(1) states that FINRA shall have the right to require a “[securities broker] to provide information orally, in writing, or electronically . . . with respect to any matter involved in [a FINRA] investigation.” FINRA Rule 8210(c) provides that “[n]o [securities broker or brokerage] shall fail to provide information . . . or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.”

A violation of FINRA Rule 8210 is also a violation of FINRA Rule 2010, which requires securities brokers to “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business.

On October 14, 2022, FINRA sent a request to Silva for the production of information and documents pursuant to FINRA Rule 8210. Silva failed to provide a response to that request. On November 1, 2022, FINRA sent a second request to Silva for the production of information and documents. As stated in email correspondence to FINRA on November 14, 2022, and by this agreement, Silva acknowledges that he received FINRA’s requests and will not produce the information or documents requested. By refusing to produce the information or documents as requested pursuant to FINRA Rule 8210, Silva violated FINRA Rules 8210 and 2010.

Please contact us if you have information or have suffered losses due to Fernando Silva.

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