Welcome to Financial Advisor IQ
Follow

Morgan Stanley Kept Advisor on Despite Knowing of Alleged Abuse

March 29, 2018

For years, Morgan Stanley executives have been fully aware of the physical abuse allegations against one of its top brokers but apparently did nothing, the New York Times writes.

Seven former Morgan Stanley employees tell the paper the company’s executives had known of Oregon-based Douglas Greenberg’s alleged violence against several women. The wirehouse had received a federal subpoena in 2016 connected to an abuse allegation, a lawyer for one of the women tells the Times. A manager had alerted the higher-ups about Greenberg violating a restraining order, three former employees tell the paper. And an executive came to Portland from the company’s New York headquarters to investigate the allegations, two employees tell the paper. Nonetheless, the wirehouse doesn’t appear to have take any action against Greenberg — in fact, as of writing he was still a member of its “Chairman’s Club,” a group for top producers whose conduct is considered exemplary, the Times reports.

During the course of 15 years, four women in the Portland, Ore., suburb of Lake Oswego have asked for police protection against Greenberg, the paper writes. In an application for a restraining order, one woman said Greenberg had threatened to burn down her house with her in it. Another wrote that he had choked her hard enough to leave a mark on her throat, and a third wrote Greenberg was scaring her and her children, according to the Times.

“Everybody knew,” Jani Beatty, a former vice president at Morgan Stanley’s private bank, tells the paper. “I considered him my friend until I understood the full extent of his actions against his intimate partners.”

But Greenberg’s production places him among the top 2% of Morgan Stanley’s brokers, the paper writes. Furthermore, Finra’s BrokerCheck record doesn’t include any of the allegations of violence against women, according to the Times. His profile includes a dismissed charge of theft by check, dating back to 1984, a criminal mischief charge, also dismissed, from 2001, two customer disputes and a regulatory penalty, the paper writes.

Yet apparently Greenberg has had plenty of other dealings with law enforcement and regulators, according to the Times. He admitted in a 2000 arbitration case that he had misled someone about a colleague, claiming the colleague was involved in suspicious business, but wasn’t punished because of the expiration of the statute of limitations, the paper writes. In 2006, Greenberg was charged with harassment and criminal mischief for violating a restraining order, according to court papers and a police blotter item in the Lake Oswego Review cited by the Times. The broker pleaded no contest to a misdemeanor charge of criminal trespass in that case, according to a plea deal seen by the paper. In 2014, Greenberg was again charged with violating a restraining order, this one taken out by a different ex-girlfriend, according to the Times.

Earlier this week, after the Times contacted the wirehouse about Greenberg, he was put on administrative leave pending review of the situation, a Morgan Stanley spokeswoman tells the paper. Greenberg told the Times, “It’s interesting that a reporter from New York would somehow have all this information just on her own,” but declined further comment.

Separately, the industry’s self-regulator has barred a former Morgan Stanley advisor who was being investigated in connection to possibly unsuitable options recommendations, according to a letter of acceptance, waiver and consent from Finra.

Finra

The wirehouse had terminated Matthew Singer in March 2016 over concerns regarding his conduct in a client arbitration matter, Finra says. In January 2017, Morgan Stanley amended his Form U5 to disclose a customer arbitration, according to the letter. And since 2016, Finra has been investigating Singer to determine whether he had made unsuitable recommendations, the regulator says. Earlier this month, Singer chose not to appear for on-the-record testimony for the case, for which Finra barred him from the industry, according to the letter.

Singer had been registered with eight separate firms during his time in the industry, which began in 2006, according to his BrokerCheck profile.

He was with Morgan Stanley from July 2013 to March 2016 and never registered with another firm after his termination.

Singer is at least the second Morgan Stanley advisor to get barred from the industry in March.

Earlier this month, Finra barred an advisor who had been with the wirehouse from July 2010 through March 2016 over unauthorized trading in client accounts. Morgan Stanley has paid out around $2.5 million to affected clients already.

By Alex Padalka
  • To read the New York Times article cited in this story, click here.