Former Morgan Stanley broker Justin Amaral (CRD# 4440980) is accused of churning customer accounts and generating excessive commissions. Amaral has been registered with Morgan Stanley in Boston, Massachusetts from 2009 to 2014, when he was terminated regarding, “the allegations related to, among other issues, the employee’s status as an executor and beneficiary in a client’s estate and his use of discretion in several client accounts.”
In October 2019, the commonwealth of Massachusetts ordered Morgan Stanley to pay $382,500 for failing to supervise Amaral. Morgan Stanley agreed to pay a $200,000 fine as well as repayment of $182,500 to four clients.
According to the order, Morgan Stanley consented to findings that complex managers, compliance personnel, and other supervisors of Amaral “closed out” 97 alerts of excessive trading in his clients’ accounts during a four-plus year period from 2010 into 2014 without further investigation. It is alleged that Amaral’s stated to his supervisors that the alerts reflected poor markets and account rebalancing.
The order stated that Amaral was the broker of record for at least 455 client accounts in Massachusetts, while employed at Morgan Stanley.
In June 2015, FINRA barred Amaral after he consented to the sanctions and to the entry of findings that he failed to appear for on-the-record testimony requested by finra during the course of an investigation.
Amaral has been the subject of five customer complaints between 2014 and 2017, according to his CRD report:
July 2017. “Client’s attorney alleged former FA excessively traded account and made unsuitable investments for the client. 03/22/2011-04/30/2014.” The customer sought $138,919.38 in damages and the case was settled for $100,000. This case was regarding exchange traded funds (ETFs).
July 2017. “Client’s attorney alleged that the client’s former FA forged their signature on an annuity surrender form, did not advise them of surrender penalty and also make unsuitable and excessive trades in their account. 12/01/2011-04/30/2014.” The customer sought $40,000 in damages and the case was settled for $25,000. This case was regarding variable annuities and common and preferred stocks.
February 2016. “Client’s attorney alleges breach of fiduciary duty, inter alia, with respect to investments 2010 – April 2014.” The customer sought $750,000 in damages and the case was settled for $257,000. This case was regarding mutual funds.
January 2015. “Claimant alleged, inter alia, that the closed-end funds in her account were unsuitable and misrepresented from January 2008 to December 2014.” The customer sought $500,000 in damages and the case was settled for $1,074,777.30. This case was regarding close-end funds (CEFs).
June 2014. “Client alleges gross mismanagement and misrepresentation. 01/02/2012-12/31/2013.” The case was settled for $313,500. This case was regarding mutual funds.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Morgan Stanley may be liable for investment or other losses suffered by Amaral’s customers.
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