Step aside Wells Fargo fake account scandal: moments ago Reuters and Bloomberg reported that Massachusetts Secretary of the Commonwealth William Galvin charges Morgan Stanley with “dishonest and unethical conduct” related to “high pressure sales contests” in Massachusetts, Rhode Island.
Here are the headlines:
- Massachusetts charges Morgan Stanley with running unethical sales contests to cross sell products
- Massachusetts accuses Morgan Stanley of dishonest, unethical conduct related to high-pressure sales contests
- Massachusetts says conduct occurred in Massachusetts, Rhode Island * Massachusetts accuses brokers of pushing so-called "securities based loans" as a means to boost business
- Massachusetts files administrative complaint seeking a fine, censure, and relief for customers who got the loans
As the complaint further notes, “The sales contest created a material conflict of interest which violated the firm’s fiduciary duty to clients in pursuit of brokerage customers opening banking and lending accounts.”
Focus of contest was securities based loans; complaint seeks censure, cease and desist, equitable relief for customers who entered into SBLs. Gavlin says the contest almost tripled SBL accounts opened in year before.
MS stock falls to session lows on the news, down as much as 1.6%.