Ex-Morgan Stanley Advisor Charged with $5M Theft
The SEC and the U.S. Attorney’s office have charged a former Morgan Stanley advisor with stealing around $5 million from his clients, Reuters reports.
From December 2015 to November 2016, Barry Connell allegedly made more than 100 unauthorized transfers out of the accounts of a married couple and their daughter while lying to his employer that he had permission from the clients, according to a press release from the SEC. Connell then allegedly spent the money on private jet flights, country club memberships and a holiday house rental, the regulator says in its press release.
The regulator describes Connell’s place of work at the time as “the New Jersey office of a major financial institution,” but a person familiar with the matter tells Reuters that Connell had worked at Morgan Stanley during the period of the alleged illegal transfers. The firm isn’t being charged and isn’t even mentioned in the SEC’s press release nor in court papers from the office of U.S. Attorney Preet Bharara in Manhattan, which filed separate criminal charges against Connell accusing him of fraud and aggravated identity theft, the newswire writes.
Morgan Stanley fired Connell in November over the alleged unauthorized transfers, according to records seen by Reuters.
The newswire was unable to reach either Connell or his lawyer for comment. Morgan Stanley issued a statement last week that it’s been cooperating with regulators on the case, Reuters writes.
Meanwhile, three retiree investors have won a Finra arbitration against a firm that allegedly failed to supervise one of its brokers, InvestmentNews writes.
In 2012, an unidentified broker at Source Capital Group, a broker-dealer and investment bank, allegedly sold the three retirees more than $800,000 in stock in a healthcare technology startup that went on to declare bankruptcy in 2013, the attorney representing the retirees tells the publication.
The broker was allegedly working at a Bowling Green, Ky., branch whose manager was never told to supervise him, according to the lawyer. Source Capital was ordered to pay $1.25 million, according to InvestmentNews.
But the company still faces a pending Finra complaint from December that it had abdicated its supervisory responsibility of the Bowling Green office from 2009 to 2014, having effectively handed it over to principals of two firms in which Source Capital brokers were selling stock, the publication writes.
The firm’s president and the attorney representing Source Capital in the award didn’t return InvestmentNews’ calls for comment.