Finra Suspends Ex-Morgan Stanley Broker Who Advised on Outside Trading
Brokers can get entangled in private securities trading violations for failing to get permission from their firms for activities too good to pass up, but the reasons behind Christopher Reid’s alleged stumble are less evident.
The former Morgan Stanley Wealth Management broker helped an individual execute equity and options trades in a self-directed brokerage account at another firm after Morgan Stanley rejected the individual’s account application, according to a letter of acceptance, waiver and consent that the Financial Industry Regulatory Authority posted this week.
Reid, who joined Morgan Stanley in 2011 after working on trading desks of several electronic firms, “was not compensated for, and did not have a beneficial interest in” the money-losing account, Finra said.
Reid resigned from Morgan Stanley’s Marlton, N.J., office in September 2018 while under investigation by the firm, according to the regulatory letter, and is not currently associated with Finra. The regulator began investigating him after receiving Morgan Stanley’s U-5 “separation” form.
The self-regulatory group suspended Reid for four months and fined him $5,000. The consent letter did not name the brokerage firm where the trades were made nor detail Reid’s relationship with the individual trader.
Reid could not immediately be reached for comment, and his lawyer, John Greco, with Betancourt, Van Hemmen, Greco & Kenyon LLC in Red Bank, N.J., declined to comment.
Bill Singer, a securities lawyer who blogs about brokers’ legal battles, said the enforcement action casts a light on the outsized risks retail investors can easily take in an age of free online trading and easy market access. Receiving assistance from a professional for such transactions, he added, raises other questions.
“How could something like this happen?” Singer said. “When you see this type of case, what concerns me is where was compliance? Were there no red flags? Did the broker have no compunctions?”
As is typical of Finra enforcement consent letters, Reid agreed to the consent order without admitting or denying the findings.
In addition to charging Reid with violating Rule 3280 prohibiting unauthorized private securities transactions, Finra cited his violation of its far-reaching Rule 2010 requiring brokers to observe high standards of commercial honor and just and equitable principles of trade.
Reid began his 16-year career with a six-year stint at CIBC World Markets Corp., worked briefly at National Financial Services Services, Worldco and the since-expelled ICAP/ Investment Services, and did more stints at trading firms Assent LLC and LavaFlow before joining Morgan Stanley in 2011, according to his BrokerCheck history.
It shows no disclosures of customer, regulatory or civil or criminal complaints aside from the Finra action and Reid’s employment “separation.”