New York Securities Fraud Lawyers Blog
Morgan Stanley broker Armando Fernandez has been suspended by the Financial Industry Regulatory Authority (FINRA) for 20 business days, according to publicly available FINRA records. Per a Letter of Acceptance, Waiver and Consent filed with FINRA, Mr. Fernandez was accused of exercising discretion in a customer account without prior written acceptance of the account as discretionary from his member firm. FINRA records indicate that Mr. Fernandez was also fined $7,500.
Generally, brokers are prohibited from placing trades in a customer account without speaking to the customer first, unless an account is a discretionary account. When discretion is given by the customer to the broker, it is typically documented in a signed agreement. When there is not such a signed agreement, and a broker executes transactions on a discretionary basis anyway, violations of FINRA Rules likely have taken place.
Customers who have been the victim of brokers improperly exercising discretion in their accounts (or violating other FINRA Rules) may be entitled to recover their losses in an action against the firm and/or broker responsible.
Indeed, Mr. Fernandez has been the subject of multiple customer complaints in his career in the securities industry per FINRA. In 2001, a customer complaint alleging churning was reportedly settled for $350,000. The following year, a customer alleged that unsuitable mutual funds were recommended causing losses of over $137,000, while another alleged misrepresentations of an investment product that caused losses of over $36,000, per Mr. Fernandez’s BrokerCheck report.
More recently, customers have reportedly made allegations against Mr. Fernandez in 2012 and 2016. The earlier complaint concerned allegations of unauthorized purchase of an ETF resulting in a settlement of $165,000. The 2016 complaint is reportedly still pending and contains allegations of unsuitability and breach of fiduciary duty.