By Anna Prior
An arbitration panel ordered Morgan Stanley to pay more than
$2.3 million to a group of investors for losses tied to alleged
unauthorized trading and other misdeeds by brokers in the firm's
Jackson, Miss.-area branch.
The six investors had accused the firm and the branch manager,
Fred Brister, of failing to supervise brokers Steven Wyatt and
Hilary Joseph Zimmerman, who the investors alleged had mismanaged
customer accounts and engaged in suspect trading, according to
their arbitration claim with the Financial Industry Regulatory
Authority. The alleged misconduct occurred over a period of roughly
four years starting in 2008, said Joseph Peiffer, a New
Orleans-based lawyer representing the investor group.
The arbitration panel awarded the investors a combined $1.5
million in damages plus interest, along with $104,000 in punitive
damages and more than $677,000 in legal and other costs, according
to the award posted on Finra's website. As is customary, the Finra
arbitrators didn't provide details on the reasoning for their
decision, which was dated July 24. The investors had sought at
least $4.4 million in damages, plus other amounts.
Asked about the award, a Morgan Stanley spokeswoman said the
claimants "were a group of experienced and sophisticated investors
who were awarded only a portion of the damages they claimed to have
incurred in pursuing an aggressive, growth strategy in their
accounts during the 2008 market crash and following volatile time
period. Morgan Stanley takes its responsibilities to its customers
seriously and respectfully disagrees with the arbitrators'
decision."
Messrs. Brister and Zimmerman continue to be employed at Morgan
Stanley, according to the company's website and Finra's BrokerCheck
website. They were represented by the same lawyers as the firm.
Mr. Wyatt was fired from Morgan Stanley in 2012 for allegedly
using unapproved outside investments, according to BrokerCheck; the
website doesn't list him as being currently registered with any
firm. A lawyer for Mr. Wyatt didn't immediately respond to a
request for comment.
Kim Breese, another lawyer representing the investors, said Mr.
Wyatt purchased certain thinly traded stocks in his personal
account before buying the same stocks in client accounts, generally
at higher prices than what he paid. Mr. Wyatt would then sell his
shares before selling his clients' shares at a lower price, said
Mr. Breese.
Write to Anna Prior at anna.prior@wsj.com
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