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By 
July 18, 2024 at 03:03 PM
What You Need to Know
- The rep bought ETFs with upfront sales charges that the customers would not have had to pay if purchased in advisory accounts, FINRA says.
- In certain cases, the rep used the proceeds to make additional purchases, which resulted in additional sales charges.
- Morgan Stanley identified the rep's misconduct and reversed the transactions.
The Financial Industry Regulatory Authority has fined a Morgan Stanley rep $7,500 and suspended her for seven months for violating Regulation Best Interest through sales of ETFs.
According to FINRA’s order, Laura Casey bought and sold products that included sales charges in the brokerage accounts of four retail customers who also held advisory accounts at Morgan Stanley, without considering the comparative costs of the transactions.
Between March and July 2022, several of Casey’s advisory clients at Morgan Stanley also opened brokerage accounts.
Without authorization, Casey exercised discretionary authority to purchase and sell securities on a short-term basis, according to the order.
Specifically, over a 10-day period in July 2022, Casey purchased products, including ETFs, “which required the customers to pay upfront sales charges that the customers would not have had to pay had the products been purchased in their advisory accounts,” the order states.
Casey then sold the securities within days of purchase, resulting in additional sales charges.
