Morgan Stanley Fires NJ Broker, Puts Manager on Leave
Justice can sometimes be swift, even at a bureaucracy-heavy wirehouse.
Just seven days after Morgan Stanley last month began probing charges that a broker in its Ridgewood, NJ, branch had shifted money out of a client’s household account for his apparent benefit, the broker was discharged. His long-time Morgan Stanley branch manager is on indefinite administrative leave.
“It means that they found a lot of bad stuff pretty quickly,” said Patrick Dennis, founding principal of compliance firm Oyster Consulting in Glen Allen, Va., who has served in senior legal posts at Banc One Securities and Wachovia Securities and is not involved in the Morgan Stanley case.
Barry Connell, the broker, made “unauthorized withdrawals and transfers of funds from client’s household accounts to third-party payees, which appear to be for the benefit of the former registered representative,” Morgan Stanley wrote in its U5 termination form it filed with regulators.
A Morgan Stanley spokeswoman declined to comment.
Connell, who was born in 1966 and has worked for 16 years as a broker at Morgan Stanley and UBS Financial Services, according to the filing, could not be reached for comment. One person familiar with the incident said authorities have not been able to locate him, and another said the Federal Bureau of Investigation is involved. A spokeswoman at the New Jersey Attorney General’s office, which oversees the state securities bureau, did not immediately return a call for comment.
Prior to Connell’s dismissal on November 10, his history of customer and employer complaints was relatively sparse. In 2012 he settled a $700,000 claim for unauthorized trading by a customer for $55,000 and four years earlier, while working at Morgan Stanley’s nearby office in Pearl River, NY, agreed to a $20,000 settlement on a $29,274 customer claim that alleged failure to sell Wachovia Corp. stock in a timely manner, according to the regulatory filing.
The facts are less direct about Jeffrey Crystal, the branch manager who is on leave. One person who has spoken with Crystal and who spoke on condition of anonymity said the manager had flagged Connell’s unexplained long absences to compliance and other officials last summer as well as issues involving an unlimited power of attorney that Connell wrested from the elderly client.
Crystal did not respond to messages left at his home and office, but a person answering his work phone last week confirmed he was on leave, as did several well-placed sources.
Crystal manages more than 40 brokers apiece at offices in Ridgewood and Paramus, NJ, and has been a Morgan Stanley manager since 2001, according to company web pages.
“While Jeffrey has a variety of responsibilities he finds the most fulfilling part of his position to be introducing Financial Advisors to all the opportunities to serve clients that are available at Morgan Stanley,” his webpage biography says. “His goal is to nurture and promote a culture of teamwork and growth.”
Lawyers, recruiters and veteran brokers warned against rushing to judgment on Crystal’s suspension. “It could be any number of things, from failure to do a good job at supervision to overlooking or, in the extreme, being complicit” in the alleged illegal activities, said Dennis.
The only certainty is that Finra is asking a lot of questions as it does whenever someone is dismissed for cause, he said.
Prior to joining Morgan Stanley in Fairfield, NJ, in 1997, Crystal did several stints at Merrill Lynch and also worked at Oppenheimer & Co. and Chase Investment Services, according to his BrokerCheck history. He began his brokerage career in 1992 at Lehman Brothers.