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Morgan Stanley Fined $1M Over FA Sales Contest

April 13, 2017

Morgan Stanley has reached a $1 million settlement over allegations the wirehouse’s financial advisors held loan sales contests, the Boston Globe writes.

William Galvin, Massachusetts’ securities chief, says Morgan Stanley violated state securities regulations and its own policies by not stopping a program that rewarded advisors with higher business development allowances for peddling securities-backed loans to their clients, according to the paper.

The contest ran between 2014 and 2015 and included 30 advisors across five Morgan Stanley branches in the Northeast, the Globe writes. Galvin also says the firm’s top brass failed to stop the contest for months after they had learned about it and determined it to be against company policy, according to the paper. Part of the settlement also requires Morgan Stanley to review its policies on sales contests and submit a report of the review and any changes to Galvin’s office, the Globe writes.

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Galvin first brought charges over the sales contest in October, and at the time, Morgan Stanley said they were without merit. But in this week’s settlement the wirehouse issued a statement saying it’s pleased with the outcome and that the settlement doesn’t contain any findings of fraud or unauthorized or unsuitable loans.

When Galvin originally brought charges against the firm, he had said the contest led to a tripling in loan sales year-on-year, boosting the wirehouse’s loan balance by $24 million. The charges came weeks after revelations that similar high-pressure sales tactics had led Wells Fargo retail branch employees to open up to two million bogus deposit and credit accounts.

By Alex Padalka
  • To read the Boston Globe article cited in this story, click here.