Morgan Stanley’s Supervisory Failures result in almost $1.4 Million in Overcharges

According to a Letter of Acceptance Waiver and Consent (AWC) signed December 30, The Financial Industry Regulatory Authority (FINRA) has sanctioned Morgan Stanley Smith Barney (CRD # 149777)  for supervisory failures connected to recommendations of 529 Savings Plans.

From January 1, 2013, through June 30, 2018, Morgan Stanley failed to establish and maintain a supervisory system reasonably designed to supervise representatives’ recommendations to customers to purchase particular share classes of 529 savings plans, according to the AWC.

The firm reportedly did not provide adequate guidance to representatives regarding the importance of considering share-class differences when recommending 529 plans, according to FINRA. Further,  Morgan Stanley did not provide supervisors with adequate guidance or the information necessary to properly evaluate the suitability of 529 share class recommendations.

Morgan Stanley reportedly  initiated a review of its supervisory systems and procedures applicable to 529 plan recommendations, and corrected supervisory deficiencies it identified during that review, as well as establishing a plan to provide remediation to affected customers.

The firm reportedly consented to the sanctions of a censure and restitution of $1,460,518  plus interest to affected customers.

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