PORTLAND, Maine, CONCORD, N.H., BOSTON, Mass. — June 22, 2006 —On June
15, 2006, Morgan Stanley DW, Inc. paid $419,000 in compensatory damages to a
Maine couple after a panel of three National Association of Securities Dealers
(NASD) arbitrators sitting in Boston unanimously found Morgan Stanley and a
financial advisor formerly with Morgan Stanley’s Portland office guilty of
irresponsible investment advice. Morgan Stanley paid the award in full, without
appeal, on June 15, following the arbitrators’ May 15th order.
The Maine investors who received the award were represented by Sigmund D.
Schutz and John M. Sullivan of Preti Flaherty, LLP’s Portland, Maine, and
Concord, N.H., offices, respectively. Morgan Stanley was represented by a
New York law firm.
Attorney Schutz explained, "The arbitrators found that my clients were
credible and that Morgan Stanley acted irresponsibly." He added, “An award
of this size by NASD arbitrators in Boston in a customer dispute is unusual and
a resounding victory. The award vindicates my clients' resolve to hold Morgan
Stanley and its financial advisors accountable for their loss.”
According to attorney Schutz the case involved proceeds of the sale of a New
Hampshire construction business entrusted to Morgan Stanley for
retirement. Attorney Sullivan represented the investors in the sale of
their business, and the investors turned to him and Preti Flaherty to pursue
their claims against Morgan Stanley.
The claim alleged that a Morgan Stanley financial advisor recommended a
home equity mortgage to raise additional cash to invest in a
tech-heavy stock portfolio. The home equity was then lost in the market. NASD
has cautioned that such recommendations are generally unsuitable for investors.
Also at issue was the appropriateness of the Morgan Stanley financial advisor's
involvement in a private securities offering, the suitability of a tech-heavy
stock portfolio for the investors and the adequacy of Morgan Stanley’s
supervision within its Portland branch office.
The award is public, available at http://www.nasd.com/ArbitrationMediation/index.htm.
About Preti
Preti Flaherty has offices in Portland, Bath and Augusta, Maine, Concord,
N.H., and Boston, Mass. With more than 80 attorneys, the firm counsels
clients in the areas of business law, energy, environmental, estate planning,
health care, intellectual property, labor and employment, legislative and
regulatory, litigation, technology and telecommunications. For more information
please visit www.preti.com.
