Morgan Stanley charged with running unethical sales contest
Photo | Courtesy of Wikimedia user Alex Proimos
The Secretary of the Commonwealth William F. Galvin has charged Morgan Stanley Smith Barney LLC with with dishonest and unethical conduct in connection with high pressure sales contests, some of which took place in Worcester.
The sales contests reportedly focused on Securities Based Loans, which allow customers to borrow against the value of the securities in their investment accounts with their securities as collateral for the loan. These contests were participated in by 30 financial advisers in the Springfield, Wellesley, Worcester and Waltham offices in Massachusetts, and in Providence.
Galvin alleges that these sales contests created a conflict of interest that violated the firm’s duty to clients. The administrative complaint traces the impetus for the aggressive promotion of banking and lending to the fact that Morgan Stanley Smith Barney LLC trailed competitors in banking and lending. The sales contest was successful, according to Galvin’s office, nearly tripling the SBL accounts opened the year before the sales contest and generated nearly $24 million in new loan balances.
““This contest was relatively local, but the aggressive push to cross sell was company-wide. Morgan Stanley has stated publicly that this was extremely limited – this defense has not worked for Wells Fargo and it does not work for Morgan Stanley,” Galvin said in a statement.
The complaint seeks a censure, a cease and desist, and relief for customers who entered into SBLs through the sales contest. Also sought is an administrative fine, according to a release.
[The photo in this story was original posted to Flickr by Alex Proimos, under this fair-use license.]
WBJ Web Partners
Most Recent
Most Recent
0 Comments