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Morgan Stanley Fined $13M By SEC

The SEC announced today that Morgan Stanley agreed to pay a $13 million fine to resolve allegations that it overbilled investment advisory clients due to coding and other billing system errors. Morgan Stanley also violated the custody rule regarding annual surprise examinations. The firm overcharged over 149,000 advisory clients because it failed to adopt and implement compliance policies and procedures reasonably designed to ensure that clients were billed appropriately in accordance with their advisory agreements, the SEC's order stated. The commission also said Morgan Stanley failed to validate billing rates contained in the firm's billing system against client contracts, fee billing histories, and other documentation. Morgan Stanley acquired over $16 million in excessive fees because of the billing errors that happened between 2002 and 2016, according to the SEC. The firm has repaid this complete amount in addition to interest to injured clients. Morgan Stanley failed to comply with the annual surprise custody examination requirements for two consecutive [...]

By |January 13th, 2017|Legal Matters, Press Releases & News, SEC|
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Gregory Dean And Donald Fowler Charged By SEC

The SEC charged two brokers, Gregory Dean and Donald Fowler, with violations of securities laws for a fraudulent excessive-trading scheme designed to profit themselves at the expense of their clients. The SEC accused Dean and Fowler of using a “high-cost trading strategy consisting of the excessive buying and selling of stocks” that led to “enormous losses” for customers but profited them through “substantial commissions and other fees.” The complaint, which was filed by the SEC in New York district court, states that Dean and Fowler used this strategy in twenty-seven client accounts while registered at J.D. Nicholas & Associates Inc., a broker-dealer no longer in business that was based in Syosset, New York, without “having a reasonable basis for believing the strategy was suitable for anyone.” The SEC claims the two churned three of those twenty-seven accounts. “This case marks another chapter in the SEC's pursuit of brokers who deploy excessive trading as a strategy in customer accounts to enrich themselves at customers' [...]

By |January 11th, 2017|Broker Check, Fraud, Press Releases & News, SEC|
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John Rafal Barred From Securities Industry

The SEC barred Connecticut investment adviser John Rafal for hiding a referral fee from a client and then attempting to thwart the SEC's investigation. He was also pay $577,297 in penalties. Rafal, the former president and CEO of Essex Financial Services Inc. in Essex, Connecticut, obtained a new customer with accounts valuing over $100 million from Peter D. Hershman, a Connecticut attorney, according to the SEC order. Rafal agreed to pay Hershman $50,000 annually from the advisory fees paid to Essex by the client, an elderly widow, the order said. As part of the original agreement, Hershman was to become a registered investment adviser. But Hershman never took the test required to become an RIA, making him ineligible to receive the referral payments. Rather, between early 2011 and April 2013, Rafal and Hershman disguised the referral payments as fake invoices for legal services to the Essex client and did not disclose them to the client. When Essex stopped the arrangement, Rafal paid [...]

By |January 10th, 2017|Press Releases & News, SEC|
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Ash Narayan Banned For Defrauding Pro Athletes

Former financial adviser Ash Narayan agreed to be barred from associating with brokerage or advisory firms to settle regulators' allegations that he secretly received nearly $2 million from companies that he invested his professional athlete clients in for at least five years. Narayan additionally placed clients in unsuitable private investments and misrepresented himself as a CPA, according to a complaint filed by the SEC. Narayan, who was managing director of the Irvine, California office of RGT Wealth Advisors, a Dallas firm with about $4.3 billion in assets under management, was temporarily suspended by the Certified Financial Planner Board of Standards in October, pending investigation of the allegations. In February, RGT Wealth Advisors terminated Mr. Narayan, who had worked there since 1997, according to the SEC complaint. The alleged fraud occurred between 2010 and early 2016, during which time he directed $33 million to a company he was heavily involved with and knew was in poor financial condition. [...]

By |December 30th, 2016|Fraud, Press Releases & News, SEC|
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