Finra Raps Ex-Morgan Stanley Broker over Unauthorized Trades
The Financial Industry Regulatory Authority has suspended a former Morgan Stanley broker for three months and fined him $5,000 for making over 100 unauthorized trades in seven customer accounts, according to a letter of acceptance, waiver and consent.
The alleged trades occurred between 2014 and 2017, according to the consent letter.
Hoagland, who voluntarily resigned from Morgan Stanley in December 2017 and represented himself in the Finra negotiations, could not be reached for comment. He is not currently registered with a Finra member firm, according to BrokerCheck.
His unauthorized trading violated Finra’s ‘catch-all’ Rule 2010 requiring brokers and firms to maintain “high standards of commercial honor” and its Rule 2510(b) prohibiting brokers from exercising discretion without prior written authorization from the client, the regulator said.
Finra underscored that nine trades Hoagland allegedly made in September and October 2017 totaling $99,171 occurred in the accounts of an elderly customer. The industry-sponsored regulator earlier this year updated two other rules to permit firms that suspect exploitation of elderly customers to put their accounts on temporary hold and to attempt to establish a “trusted contact” for the customer. It did not cite those rules in the consent letter.
The fine against Hoagland was lower than one for $10,000 that Finra imposed earlier this month on a former Wells Fargo broker after he allegedly made two unauthorized trades in the account of a customer who had died. That broker also was suspended for three months.
Morgan Stanley settled two complaints from Hoagland customers last year alleging unauthorized trades for $27,544 and $17,044, according to his BrokerCheck record. The only other disclosure on his almost five-decade work history was a $183,603 settlement in 2010 of a claim for $500,000 from a customer who alleged he gave erroneous information on private placement funds sponsored by Citigroup Global Markets.
Hoagland worked at Citi’s Smith Barney unit and predecessor firms Lehman Brothers and E.F. Hutton for almost 22 years prior to Morgan Stanley’s acquisition of Smith Barney in 2009. He worked for the first 17 years of his career at First of Michigan, according to BrokerCheck.