Tag Archives: Morgan Stanley

The Fraud of Michael Barry Carter

If you were a client of Morgan Stanley broker Michael Barry Carter, better known as Mike Carter, please call 1-866-817-0201 for a free and confidential consultation to determine whether you have been a victim of fraud.

The Securities and Exchange Commission on Monday, July 20, 2020, charged a former Morgan Stanley representative with stealing approximately $6 million from brokerage customers and an elderly investment advisory client.

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

Mike Carter was a financial advisor in the McLean, Virginia office of a Morgan Stanley.  He falsified internal documents in order to effect dozens of unauthorized wire transfers, totaling millions of dollars, from the accounts of brokerage customers to his own personal bank accounts.  

“As a financial advisor, Carter was entrusted with millions of dollars belonging to his brokerage customers, his advisory clients, and their families,”  stated SEC’s New York regional office director in a press release. “As alleged in our complaint, Carter instead took advantage of that trust for his personal gain.”

Morgan Stanley also failed to adequately monitor money transfers to accounts of its brokers.  Adequate supervision would have stopped most, if not all of these transfers.

Carter attempted to hide his fraud with the circulation of false account statements to his investors.  He then used the stolen funds to pay his credit cards and his mortgage.

Carter has been charged by federal authorities with wire fraud and other criminal counts.

Virgin Galactic (SPCE) Losses

Virgin Galactic (SPCE) has been recommended and sold to moderate and conservative investors in violation of FINRA and SEC regulations.  These regulations require that brokers and advisors only make investment recommendations consistent with the objectives and risk tolerance of an investor.  SPCE has always been an extremely risky investment.

SPCE saw its value pushed by analysts such as Morgan Stanley, who had given it an oversize price target.  The stock proceeded to gain 200%.  The stock crashed to Earth when Morgan Stanley reversed its analysis.

Recovering investment losses through FINRA is a specialty skill few attorneys possess.

Recovering investment losses through FINRA is a specialty skill few attorneys possess.

Unfortunately, smaller investors who should have never been invested in SPCE are the ones paying the price.  Many investors will blame themselves for not timing the market better; however, investment suitability is not about time timing but whether the investor should have been in the investment at all.  Even if an investment had or did increase in value, risky investments are not suitable for moderate investors because such investments have the substantial potential for such volatility.

Recommending such an investment to a moderate or conservative investor creates liability on the part of the broker or advisor.  Such violation of industry regulations can be both negligence and fraud.

If you have lost principal in the SPCE or other speculative investments despite being a moderate to conservative investor please give us a call at 866-817-0201.  You need to retain an attorney that understands the FINRA arbitration process which is different than the litigation process.  Jeffrey Pederson is an attorney that has helped investors recover millions through FINRA.

 

Morgan Stanley ETF Losses

If you have suffered losses with an ETF purchased through Morgan Stanley please call 1-866-817-0201 for a free and confidential consultation with a private attorney concerning your rights. We have reason to believe that Morgan Stanley engaged in systematic wrongdoing in the sale of certain ETFs based upon recent findings of the The Securities and Exchange Commission.

The SEC announced on February 14, 2017 that it has settled with Morgan Stanley for $8 million for inappropriate sales of complex exchange traded funds to advice clients.  More importantly, Morgan Stanley admitted to wrongdoing.

Morgan Stanley failed to obtain a signed client disclosure notice, which stated that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy.  This is important because the number of clients this impacted number in the hundreds.

The investment recommendations were also unsuitable, in violation of the regulatory duties that Morgan Stanley owes its investors.  Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long-term, and many of the clients experienced losses.

The SEC’s order further finds that Morgan Stanley failed to follow through on another key policy and procedure requiring a supervisor to conduct risk reviews to evaluate the suitability of inverse ETFs for each advisory client.  Among other compliance failures, Morgan Stanley did not monitor the single-inverse ETF positions on an ongoing basis and did not ensure that certain financial advisers completed single inverse ETF training.

Morgan Stanley also owes a duty to the investors to follow its own internal regulations.  The SEC’s order finds that Morgan Stanley did not adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs.

“Morgan Stanley recommended securities with unique risks and failed to follow its policies and procedures to ensure they were suitable for all clients,” said Antonia Chion, Associate Director of the SEC Enforcement Division.