Regulator Tells Ex-Morgan Stanley Star Ami Forte to Expect Churning Charges
(Adds details in last paragraph of upcoming arbitration hearings on Forte’s wrongful termination claim.)
Ami Forte, the former star Morgan Stanley advisor who was fired in 2016 after she and the firm lost a $34.4 million arbitration with the widow and estate of one of her clients, has received a regulatory notice warning her to expect disciplinary action.
The Financial Industry Regulatory Authority sent the so-called Wells Notice to the former Florida-based “top broker” in late January, according to her BrokerCheck report.
The regulator has made a preliminary determination to recommend disciplinary action for potential violations of rules prohibiting excessive trading in discretionary accounts and of unsuitable trading based on a customer’s financial status, tax status and investment objectives, according to the report. She also is likely to be charged with violating Finra Rule 2010 that requires brokers to observe high standards of commercial honor and just and equitable principles of trade, it said.
“They haven’t provided any details to us, but we’ve told Finra there is no evidence of wrongdoing on any of those changes and that there is no merit to them,” said Robert Pearl, who is also representing Forte in an arbitration against Morgan Stanley seeking deferred bonuses, retention of forgivable loans and expungement of the firm’s termination language. “She is going to defend herself.”
Finra has also sent a Wells Notice to Charles “Chuck” Lawrence, a former teammate of Forte who she claims was responsible for executing trades in the account of the customer, Home Shopping Network co-founder Roy Speer. He was mentally incapacitated during the relevant 2009-2012 period when the trading occurred, his family alleged.
Lawrence, who was not a defendant in the Speer arbitration, also was fired by Morgan Stanley in March 2016. He did not respond to a request for comment left for him at the Tampa-area office of independent broker R.F. Lafferty. He previously told AdvisorHub that the fixed-income trades he made for Speer were profitable and followed Morgan Stanley’s strategic guidance.
His BrokerCheck report notes that he received the Finra warning on January 29, four days after Forte, but does not have details on what he expects to be charged with.
Terry McCoy, the former manager of the Palm Harbor, Fla., Morgan Stanley branch that housed Forte and Lawrence, was a defendant in the Speer estate arbitration and held jointly and severally liable with the firm and Forte. Het has no record of receiving a Wells Notice on his BrokerCheck report.
McCoy left Morgan Stanley by mutual agreement in November 2016, and has not re-registered with any firm.
Hearings on Forte’s wrongful termination arbitration claim and Morgan Stanley’s counter-claim are scheduled to begin in November, Pearl said. Morgan Stanley has told regulators she was fired for failing to report tax liens in a timely manner as well as for allegedly violating industry rules and firm policy regarding discretionary trading of client accounts.