Massachusetts is seeking a censure, cease and desist and equitable relief for customers after charging Morgan Stanley with conducting an unethical sales contest, according to a recent Investment News article.  The sales contest, which ran from January 2014 to April 2015, encouraged advisorsto get their clients to take out Morgan Stanley loans against their Morgan Stanley securities account. The securities in their accounts acted as the collateral to back the loans.

The advisors were rewarded monetarily for obtaining loans. The article stated advisors would receive $1,000 for 10 loans, $3,000 for 20 loans and $5,000 for 30 loans and the contest produced $24 million in new loans for Morgan Stanley. The article quoted the Massachusetts Secretary of the Commonwealth as saying the advisors violated their fiduciary duty by recommending investors take on new debt. A spokesperson for Morgan Stanley stated Massachusetts’ complaint was without merit.

If you or someone you know has lost money as a result of a loan taken out against your securities account at the recommendation of your advisor, in an investment or due to broker misconduct, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.