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Morgan Stanley to Pay Millions in Arbitration Ruling

Wednesday, June, 29, 2016

Investment firm Morgan Stanley has been ordered to pay more than $8.6 million to a retiree for losses experienced after alleged unauthorized trading and investments that were deemed unsuitable. This ruling came from an arbitration panel that cited a high-risk Chinese internet company as one of the red flag issues in the retiree’s portfolio.


Denis Doyle, a former Morgan Stanley client and retiree in his 70s, alleged financial elder abuse when he filed his claim with the Financial Industry Regulatory Authority (FINRA) last year with his now-deceased wife.


The award letter stated Mr. Doyle is entitled to $6.1 million in damages, as well as $2 million in punitive damages, as well as nearly half a million in legal and other costs. The panel did not provide details as to how they reached their decision, but did state they found evidence of financial elder abuse.


According to the accounts of fraud and inappropriate investing given by Doyle’s attorney, there were more than $2 million in commission generated in approximately three and a half years. One of the most obvious instances of a problem came with the investment into NQ Mobil Inc., a Chinese internet company that began trading in the United States in May 2011. The stock rose from under $10 per share and closed at nearly $25 by October 2013 before falling to the current rate of about $5 per share.


When the Doyle’s noticed a significant drop in the value of their account, they asked their children to investigate. They found the decline was caused by NQ Mobile, which the couple had 18% of their investments in at one time. Another red flag investment was a Papua New Guinea oil and gas company which was 43% of the couples’ account holdings at one time.