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Fired Morgan Stanley Brokers May Have Grounds for Wrongful Termination Claims

Morgan Stanley Fires Financial Advisors After Inherited Account Credits Investigation

Morgan Stanley (MS) announced recently that it has terminated a number of financial advisors after a months-long investigation into payments being made to retired Morgan Stanley financial advisors under Morgan Stanley’s own Legacy Account Payments Program. 

Morgan Stanley’s “sunset plan” allows brokers who are retiring from the firm to split fees and commissions with brokers who inherit the retiring broker’s accounts.  

Morgan Stanley reportedly opened a nationwide investigation into whether current and former brokers were following the Legacy Account Payments Plan or possibly abusing it.  According to AdvisorHub, Morgan Stanley has admitted to terminating at least 10 current financial advisors, although there could be more, as a result of this investigation.  

Ex-Financial Advisors Claim They Were Only Following Directions 

Several brokers who have been let go by Morgan Stanley may have reasons for pursuing wrongful termination claims. According to AdvisorHub, some of these former Morgan Stanley brokers are claiming that they were only following the directions of more senior members of their team when they allegedly improperly recorded their commissions.  

Moreover, most of these brokers have not only lost their jobs but have also lost years of deferred compensation that Morgan Stanley forces its brokers to withhold each year and which is typically lost when a broker is terminated.

At Shepherd Smith Edwards & Kantas (SSEK Law Firm at investorlawyers.com), we represent financial advisors who may have claims against their firm related to their employment. Contact our FINRA wrongful termination lawyers if you were one of these brokers who was let go by Morgan Stanley and would like to file wrongful termination claims against the broker-dealer.

Broker-Dealer Should Have Properly Enforced Its Former Advisor Program 

AdvisorHub reports that Morgan Stanley contends that some of the inheriting brokers were not properly recording trades in the fee tracking program at Morgan Stanley. 

Morgan Stanley reportedly was worried this type of miscoding could lead to recordkeeping and regulatory violations.  For example, the inheriting brokers are accused of recording commissions under their own production numbers instead of the joint production numbers that are required under the firm’s sunset program. 

As AdvisorHub noted,  one broker, a high-producing, longtime Morgan Stanley advisor in Florida, purportedly recorded about 2017 trades improperly. However, he claims that he was only following a more senior broker’s instructions. Another now ex-Morgan Stanley advisor, this one based in California, contends that she too was only going by a senior team member’s orders.

With sunsetting programs, which can be challenging to oversee, it is the brokerage firm’s duty to make sure that all parties—the retiring broker, the inheriting broker, and the firm—abide by the contract. Some of the brokers who were let go say they were given no warnings prior to their firings. At least three of the financial representatives do not have any disclosures on their BrokerCheck record. 

Representing Brokers With Claims Against Their Broker-Dealers 

Our FINRA wrongful termination lawyers at SSEK Law Firm would be happy to offer any financial advisor Morgan Stanley terminated under this investigation a free case assessment. Call (800) 259-9010 today.

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