Finra Raps Another Ex-Morgan Stanley Broker over UIT Sales Practices
When Vincent Sciabica, a broker in Albany, NY, for 17 years, sees the letters UIT these days he runs in the other direction.
“Sciabica is no longer using Unit Investment Trusts in client accounts, and hasn’t been for the past three and a half years while at Merrill Lynch,” he wrote in a “Statement of Corrective Action” attached to a consent order published Friday on Finra’s enforcement website. “He has undergone heightened supervision during that time without any issues or complaints.”
Finra suspended the broker from working as registered rep for six months and fined him $5,000 for UIT sales violations from January 2013 to August 2014 while he was working at Morgan Stanley. The regulator accused him of inappropriately promoting short-term trades of the securities that carried high sales charges ranging from 1.95% to 3.59% in 359 customer accounts, and of using proceeds to purchase more UITs with the same longer-term objectives.
Sciabica is the latest former Morgan Stanley broker to be hit with UIT sales practice charges following the firm’s own run-ins with regulators over the securities.
Finra fined Morgan Stanley $3.25 million In September for failing to adequately supervise short-term sale of UITs by hundreds of brokers from 2010 through mid-2014 and ordered it to repay almost $10 million to customers. The firm subsequently began an internal sweep of its UIT sales-practice procedures.
Sciabica is also not the first ex-Morgan Stanley adviser to say he no longer bothers with UITs. Charles Anderson, a Pennsylvania advisor who in December received a four-month Finra suspension and a $5,000 fine, told AdvisorHub at the time that one of the lessons he learned was to simply avoid the products.
Last August, the regulator suspended another former Morgan Stanley broker in Colorado from working as a registered representation for six months for recommending sales of over 100 UIT products before their maturity dates. In December, a former Morgan Stanley broker agreed to a four-month suspension and $5,000 fine over allegedly unsuitable UIT recommendations.
In August, Finra suspended another former Morgan Stanley broker with a 30-year career over similar UIT trading pattern recommendations in 107 accounts.
Sciabica, who settled Finra’s charges without admitting or denying the findings, did not return a request for comment. Morgan Stanley fired him in August 2014 over “concerns regarding representative’s transactions without authorization at the time of the transactions,” according to his BrokerCheck history. He joined Merrill that September.
His lawyer, Michael McAllister of Satterlee Stephens in New York, did not return a call for comment.
Finra has highlighted UITs as a product-suitability focus area for its examiners and enforcement attorneys.