..as reported in Financial Planning
Advisors in the Hot Seat: Is FINRA Taking Claims More Seriously?
By Ruthie Ackerman
January 3,
It’s unclear whether stricter financial regulatory guidelines will prevent another global meltdown, but it seems that in the short run investors’ claims against financial advisors are being taken more seriously.
Take the retired Dade County court clerk, for example, whose retirement account was allegedly managed poorly by Wachovia Securities. The clerk has been awarded a FINRA arbitration panel, full recovery of the losses requested, plus interest, attorney fees, forum fees and costs, according to a statement released on Monday. The claim against Wachovia Securities, Inc., by the Securities Law Firm of Mark A. Tepper P.A., alleges that the firm disregarded that the client needed her retirement lump sum payment to supplement her social security and the remainder of her State pension. Tepper claims the Wachovia Bank employee directed his client, to speak with a Wachovia financial advisor, instead of opening an IRA account and placing her retirement funds into a money market account.
“Wachovia Securities, Inc., did not act ‘vigorously,’ as required by the SEC, to contact the retiree about this ‘indication of wrongdoing,’ and instead allowed the financial adviser to exploit the retiree,” the claim alleged.
Tepper has represented customers in claims against major and regional brokerage firms including Merrill Lynch, Morgan Stanley and UBS.
Meanwhile, the Financial Services Institute (FSI) announced on Dec. 20 that it endorsed FINRA as the self-regulatory organization (SRO) for investment advisers in a letter to the Securities and Exchange Commission n order to “enhance investor protection and improve transparency to investors.” “Having a regulatory structure that places the same emphasis on the examination of investment advisers, broker-dealers and their affiliated financial advisors will benefit investors by closing the existing gap in dedicated regulatory examination and enforcement resources between broker-dealers and investment advisers,” the letter said.”
In another case last week, Robert Bryant, a 401(k) participant, claimed Morgan Stanley caused significant losses when his concerns that the stock market was too risky were ignored and his request to move money out of the stock market was not acted upon by his advisor James Miller. Miller argued that Bryant should stay in the stock market. Morgan Stanley was liable for not effectively supervising Miller, Bryant charged.
FINRA awarded Bryant $80,504, as well as $1,500 in costs and $26,566 in lawyers’ fees, all of which Morgan Stanley will have to pay.