Finra Charges Ami Forte in Churning Case that Cost Morgan Stanley $34 Mln
The Financial Industry Regulatory Authority on Thursday charged former Morgan Stanley broker Ami Forte and a one-time associate with excessive trading, churning and other abuses in the accounts of a wealthy client whose family previously won a $34 million arbitration award from the firm and the broker.
Forte, who has separately challenged the wirehouse’s attempt to collect millions of dollars to cover her part of the award and counterclaimed for almost $2 million of deferred compensation, denied the self-regulatory group’s charges and took the unusual step of attacking it for colluding with one of its largest member firms.
“It is extremely telling that Finra has taken no action against the untouchable Wall Street megafirm that is Morgan Stanley, but it hounds an employee for years after her wrongful termination,” she said in a prepared statement. “Enough is enough. It’s time for Finra to stop being Morgan Stanley’s lap dog. Finra is supposed to regulate Morgan Stanley, not do its bidding.”
A Finra spokeswoman said the regulator cannot comment because the matter is in litigation.
“Finra’s enforcement proceeding speaks for itself,” a Morgan Stanley spokeswoman wrote in an e-mail. “Morgan Stanley looks forward to addressing Ms. Forte’s conduct and her baseless claims in its upcoming arbitration with her.”
Forte, who over 15 years at Morgan Stanley’s Palm Harbor, Fla., branch often qualified as a top-quintile broker and was touted in top-broker polls, was fired in March 2016 after she and the firm were ordered by a Finra arbitration panel to pay $34 million to the estate of Home Shopping Network co-founder Roy Speer because of unauthorized trading and other violations.
Speer, identified in Thursday’s enforcement complaint by his initials, was once romantically involved with Forte but suffered from “severe cognitive impairment” by the time she and associate Charles Lawrence generated $9 million in commissions in more than 2,800 trades over a ten-month period in 2011 and 2012, Finra alleged. Lawrence received a salary of up to $150,000 and bonus of up to $200,000 but no commissions from the trading activity, the complaint said.
Finra’s enforcement division asked the regulator’s Office of Hearing Officers for unspecified monetary sanctions and findings that excessive trading, unsuitable recommendations and other violations by Forte and/or Lawrence transgressed Federal Exchange Act and Municipal Securities Rulemaking Board rules.
Richard Nummi, a St. Petersburg lawyer who represents Lawrence, did not respond to a request for comment.
Lawrence now works at R.F. Lafferty & Co.
Forte earlier this year opened a Florida office for Syracuse, N.Y.-based independent firm Pinnacle Investments, but left in October after Finra told her in a Wells letter it was likely to bring an enforcement complaint.
Forte’s lawyer on Friday repeated past assertions that Morgan Stanley showed bias in allowing male executives—including her former branch manager Terry McCoy, a respondent in the Speer family arbitration who Finra has barred—to leave with severance packages while allegedly dunning his client.
“Whether fueled by sexism or a transparent ploy to provide a scapegoat for Morgan Stanley, these charges against Ms. Forte are a disgrace,” said Robert Pearl, who has alleged wrongful termination and discrimination in one of the arbitration claims on his client’s behalf. “It’s the height of injustice to punish Ms. Forte for Mr. McCoy’s self-enriching schemes and Morgan Stanley’s negligence and complete lack of supervision.”
In her prepared statement, Forte also zeroed in on the timing of the FInra enforcement complaint.
“It’s typical of Finra’s strong-arm and coercive tactics to file a series of absurd claims against me just days before Christmas,” she said.