Morgan Stanley, FA Fined Over Elder Abuse
Morgan Stanley and one of its brokers are on the hook for $396,623 for failing to protect an elderly client from a fraudster — despite the advisor having repeatedly warned the client against handing over her money, AdvisorHub writes.
A Finra panel found the wirehouse and advisor Steven Crawford had allowed the client to take out money for payments in 2009 and 2010 for a home security system to a con man who has since been convicted, the industry website writes.
The panel’s decision came despite the fact Crawford warned the client several times against the withdrawals and suggested she alert her relatives, but the broker also lacked authority to stop the disbursements, according to AdvisorHub.
Mark Priver, one of the Finra arbitrators involved in the decision, however, took issue with the claim of the client’s heir, writing in his dissenting opinion that the claim is “a classic example of ‘no good deed goes unpunished,’” according to AdvisorHub.
Priver also said Crawford couldn’t alert the client’s relatives or authorities because of privacy laws, the website writes. The client had allegedly paid the fraudster $295,000 within two months after Crawford’s warning her that she was being taken, Priver wrote, according to AdvisorHub.
In March, the SEC approved a Finra senior financial protection rule that would allow advisors and firms to put temporary holds on suspicious disbursements as well as require them to make reasonable efforts to get contact information of a trusted person for each client’s account. But the recent decision is likely to confuse brokers as the Finra rule doesn’t go into effect until next year, observers tell AdvisorHub.
“Even the best financial firms with the most robust compliance programs who are teaching their brokers to be on the lookout for elder abuse may run into problems here,” Jason Gottlieb, a litigation partner at Morrison and Cohen, tells the website.