Finra Bars Morgan Stanley Veteran Fired over Inherited Accounts
The Financial Industry Regulatory Authority has barred a former Morgan Stanley broker in South Carolina for refusing to cooperate with its investigation into his termination over alleged abuse of the firm’s inherited account program.
Halvorson informed Finra this month that he would not produce documents or other data, triggering violation of its Rule 8210 on document production and its Rule 2010 requiring brokers to observe “high standards of commercial honor and just and equitable principles of trade,” according to a letter of acceptance, waiver and consent disclosed on Tuesday.
But the underlying inherited-account charge casts light on the complexities of client-retention programs large firms have been promoting to retiring advisors.
Halvorson, who represented himself before Finra investigators, could not be reached for comment at publicly listed numbers.
The regulator sent its request for information to him almost two months after Morgan Stanley fired him on November 20 for alleged abuses of its Former Advisor Program (FAP). It cited “[c]oncerns that [he] submitted transactions under production numbers that were inconsistent with [his] agreement with another representative resulting in a shortfall of revenue credited to the other representative,” according to the settlement letter.
The wirehouse dismissed about 10 advisors late last year over alleged abuses that robbed retirees of revenue credits due under FAP, and the repercussions of its internal probe are still being felt.
“It’s just a matter of time before all the people who are involved in this hear from Finra,” said Marc Dobin, who was not familiar with the Halvorson case but represents another former Morgan Stanley broker who was terminated over the allegations. “Finra’s position is that if they lie on this, they will have the propensity to lie in other circumstances.”
Morgan Stanley’s investigations were sparked by complaints from retired brokers, sources said in November. Some of the inheriting brokers have defended themselves by citing clerical errors of miscoding, and at least one told Dobin that a manager or senior broker encouraged him to take full credit for inherited account activity.
Halvorson is among the most tenured advisors to have been dismissed in the FAP probe. He began his career in 1987 with First Chicago Investment Services in Chicago, joined Smith Barney in 1996 and remained in Illinois until registering at a South Carolina Morgan Stanley branch in 2009, according to his BrokerCheck history. He has not re-registered with Finra since his termination from Morgan Stanley.
He has two other disclosure events on his record—a customer claim involving auction-rate securities in 2012 that was denied and a 2007 civil judgement or lien of $4,000.
A spokeswoman for Morgan Stanley declined to comment.