Lose Money with Morgan Stanley Smith Barney, LLC Financial Advisor Patrick Dennis Combs?
Posted on Monday, March 20th, 2017 at 4:10 pm
Erez Law is currently investigating former Morgan Stanley Smith Barney, LLC financial advisor Patrick Dennis Combs (CRD# 2720909) regarding an outside investment with a Morgan Stanley customer and a private sports drink company. Combs was registered with IMS Securities, Inc. in Houston, Texas in 2016, but his employment lasted less than one year. He was formerly registered with Morgan Stanley in Southlake, Texas from 2009 to 2016. Combs was terminated from Morgan Stanley in February 2016 following the allegations of selling away with a private sports drink company and using his Morgan Stanley email address to facilitate a private investment for a Morgan Stanley client.
FINRA has suspended this individual from acting as a broker for seven months, beginning in March 2017. Combs is also a retired professional baseball player.
According to the FINRA Acceptance, Waiver & Consent, Combs is alleged to participate in a private securities transaction without providing written notice to Morgan Stanley. According to the document, Combs participated in an in-person meeting between a Morgan Stanley customer, a professional athlete, and a professional acquaintance who was a consultant for a privately-held sports drink company. The Morgan Stanley customer invested $500,000 in the company, received a convertible promissory note, and a warrant entitling the investor to purchase equity at a reduced cost. The Morgan Stanley customer also became a spokesperson for said energy drink company. When answering annual compliance questionnaires, Combs submitted false answers regarding this private securities transaction. Combs consented to the suspension and was fined $7,500.
Morgan Stanley never had any knowledge of this arrangement, and thus Combs participated in selling away. Selling away occurs when a U.S. based brokerage firm sells an investment to a client without his brokerage firm’s permission, the broker is selling investments away from the firm, or simply “selling away.” A broker might partake in this inappropriate practice to earn a commission he or she would otherwise have to pass up. These investment opportunities are not properly vetted by the associated brokerage firm and therefore exposes the client to risk. This practice violates FINRA Rule 3280 that requires all people associated with FINRA to report all transactions to their employer.
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 Comb’s customers.
Erez Law represents investors in the United States for claims against Morgan Stanley Smith Barney, LLC financial advisor Patrick Dennis Combs, who is alleged to conduct outside business activities with a Morgan Stanley customer and participate in “selling away.” If you were a client of Morgan Stanley Smith Barney, LLC financial advisor Patrick Dennis Combs or another firm, 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.