Break Away From The Pack

Soft landing cushions broker’s fall after Morgan Stanley ouster

| Apr 4, 2021 | Financial Industry Dispute Resolution |

Last month, Morgan Stanley terminated a veteran Boca Raton broker with more than a billion dollars in client assets in his management portfolio. The broker began working for Smith Barney — Morgan Stanley’s predecessor — in 1989 and had spent his entire 31-year career with the company. At the time of his discharge, he generated revenue in the range of $4 million to $5 million annually for the company.

According to some media sources, the broker was terminated because of “operational concerns” that included multiple infractions related to work-from-home protocols. No allegations involved any sort of harm to his clients.

One company’s loss is another’s gain

Industry insiders revealed the broker was quickly hired by Raymond James Financial in the same capacity. Apparently, those in charge were willing to overlook some past procedural missteps. However, this case perfectly illustrates the hurdles brokers face to remain compliant while working remotely from home.

The chief executive of MarketCounsel, a business and regulatory compliance consulting company, remarked, “People . . .  have developed a false sense of security that being home is a safe place . . . [T]hey don’t realize . . . all their work is done through computer systems that are heavily monitored and surveilled, so firms are getting really good at tracking down these types of violations.”

Client integrity, security must not be breached

In the world of high finance, discretion and secured account access are paramount. Brokers must take every step to preserve the integrity of client data during all transactions. If a transition to another company is in the works — whether voluntary or involuntary — a seasoned attorney can assist with negotiations for severance packages and other golden parachutes for Registered Investment Advisors (RIA) breaking out on their own.