FINRA suspended a former Morgan Stanley representative, Laura Casey, for “willfully” violating the SEC's Best Interest Rule, according to a residence released today.
During 10 days in July 2022, Casey purchased multiple products for clients, including exchange-traded funds, with upfront sales fees. According to FINRA, clients would not have had to pay these fees if Casey had purchased them through client advisory accounts, but beginning in March 2022, some of Casey's Morgan Stanley advisory clients also opened brokerage accounts. Casey held the products for several days before selling them, placing additional sales charges on customers' accounts. In some cases, Casey used the proceeds from these sales to make more purchases, adding sales fees.
“Casey did not have a reasonable basis to believe that placing these trades in the clients' brokerage accounts was in the clients' best interest in light of the short intended holding periods and associated costs,” the settlement said. FINRA.
Clients paid about $37,750 in unnecessary sales fees, but Morgan Stanley found the erroneous fees and reversed them, meaning Casey received no commission. According to FINRA, Casey executed approximately 46 trades in seven brokerage accounts without prior written authorization from clients or Morgan Stanley.
According to FINRA data, Casey entered the industry in 1996, spending a year at Goldman Sachs before brief and periodic stints at Bear Sterns and Citigroup. She joined Morgan Stanley in 2018.
Casey resigned from Morgan Stanley “while under internal review” in September 2022, according to the agreement. From August 2022 to September of the following year, Casey was registered with Capitol Securities Management. She was suspended for seven months and will pay $7,500 to settle the charges without admitting or denying them.
Morgan Stanley declined to comment.
FINRA suspended him first rep for Reg BI-related offenses in fall 2022 when it accused a former representative with Network 1 Securities of recommending several “excessive” transactions (the representative paid a $5,000 fine).
In January, LPL Financial paid more than $6 million to settle FINRA charges that it failed to comply with Reg BI when recommending trades in certain business development companies. FINRA claims a small brokerage firm based in Texas breached Reg BI mandates in April.