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Former Morgan Stanley Client Won $520,000 Award for Unsuitable ETF Losses

Posted on Saturday, July 20th, 2019 at 8:16 pm    

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In May 2019, a former client of Morgan Stanley won an award in a FINRA arbitration for compensatory damages for $519,089 plus 8.75% interest per annum for losses sustained from unsuitable ETF recommendations. The investors were clients of broker Timothy Prouty (CRD# 4928098).

The causes of action included suitability; deceptive trade practices; breach of fiduciary duty; negligent misrepresentation; breach of contract and implied covenant of good faith and fair dealing; negligent supervision; control person liability; and respondeat superior. Claimants alleged losses in eight accounts held with Respondent resulting from the participation in an investment advisory program and from the purchase of individual junk bonds, ETFs that invested in derivatives and futures contracts, and option contracts. The FINRA arbitration hearing was conducted in Albuquerque, New Mexico.

Prouty was unnamed in this suit and requested to have the record expunged. The panel denied this expungement request.

Prouty has been registered with Morgan Stanley in Albuquerque, New Mexico since 2009.

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 Prouty’s customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.