The New Jersey Bureau of Securities fined Morgan Stanley $100,000 after an investigation found that the firm allegedly sold exotic exchange-traded funds ("ETFs") to unwary customers, including elderly investors seeking investment income.
According to the findings, the sales took place between 2007 and 2009 and were made possible by Morgan Stanley's failure to supervise its personnel who "lacked proper training about non-traditional ETFs," a failure that contributed to the improper sales.
The Bureau stated that the sales resulted in client losses as investors were improperly and unsuitably sold the ETFs.
Morgan Stanley's $100,000 fine includes a $65,000 civil penalty, $25,000 to pay for the state's investigation and $10,000 made payable to the state bureau's investor education fund.
Morgan Stanley additionally has already paid nearly $97,000 in restitution to wronged investors.
In 2012, Morgan Stanley was one of four firms—the others were Wells Fargo, Citigroup and UBS—sanctioned a total of $9.1 million for improper leveraged and inverse ETF sales. Morgan Stanley's portion included a $1.75 million fine and $604,584 restitution payment. This penalty also pertained to the period of January 2008 through June 2009, starting just one year after the New Jersey Bureau's relative window.
Jonathan W. Evans & Associates has pending and is preparing arbitration claims against brokerage firms, brokers, registered investment advisors, and investment advisors for their sales of leveraged ETFs, inverse ETFs, and inverse leveraged ETFs.
If you have suffered losses from leveraged ETFs, inverse ETFs, or inverse leveraged ETFs, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.