Finra Dings Ex-Morgan Stanley Broker in Los Angeles over Expense Lapse
A former Morgan Stanley broker in Los Angeles who was fired almost two years ago over alleged inaccuracies in his expense reports and brought a $30 million wrongful termination suit against the firm settled a related regulatory action this week.
From July 2014 to May 2019, Moy, who worked as a wirehouse broker for 34 years, allegedly submitted a number of expense claims for business meals that had included the wrong names of the clients or prospects who had attended, Finra said.
Moy, who had his assistant prepare expense reports, allowed the assistant to write in random clients or prospects and submit the reimbursement rather than providing the assistant names along with the receipts, according to Finra. The regulator said that the underlying expenses were legitimate, but said he still violated its Rule 2010 requiring “high standards of commercial honor.”
“Notably, had Moy submitted the expense reports with the correct names of the attendees, the underlying expenses would have been reimbursable under Morgan Stanley’s business expense policies,” Finra said.
Moy, who has run his own fee-only practice, Moy Wealth Advisors in Los Angeles, since leaving Morgan Stanley, said he was happy with the outcome of the case because he felt that Finra enforcement officials understood that the violation was an attempt at a “small, administrative” shortcut and not pernicious as evidenced by their opting for the minimum sanctions.
“I am happy because that was the minimum they could have done,” said Moy, who spent 27 years at Merrill Lynch before joining Morgan Stanley in 2012. “They were very professional about it and understood.”
The regulator has been increasingly focused on expense infractions in recent years, in some cases meting out brokerage industry bars for misstated reports.
The Finra penalty will not affect Moy’s registration as an investment adviser, which he holds with Western International Securities and is overseen by the Securities and Exchange Commission, he said.
Moy declined to comment on how the termination has affected his business or how much of his $100 million book he was able to transfer following his termination from Morgan Stanley.
“It’s one of those small, administrative pain-in-the-butt details, and they used it as a lethal weapon to destroy me,” Moy said in the interview. “It was miserable.”
Moy also declined to comment on the status of the $30 million wrongful termination claim that he brought against Morgan Stanley in the months after his discharge. His lawyer, Robert J. Girard II in Los Angeles, did not return a request for comment.
A spokeswoman for Morgan Stanley declined to comment.
Morgan Stanley fired him in May 2019 for “allegations regarding the representative’s submission of inaccurate information for business expenses, his submission of inaccurate and incomplete information about outside restaurant-related business activities, and his use of firm resources for those outside activities,” according to his BrokerCheck record.
The Finra action did not mention the outside business activity allegations. Moy is an investor in several restaurants and in the M2K Group, which operates seafood and Asian eateries and sports bars, according to BrokerCheck.
In a response to Morgan Stanley’s U5 filing, Moy wrote on BrokerCheck that the termination was a “rush to judgement,” and denied the claims. The firm was attempting “to distance itself from a lawsuit wholly unrelated to my position as a financial advisor and instead, related to my approved restaurant activities,” he wrote.
Moy’s BrokerCheck record includes a $14 million lawsuit in December 2018 in Los Angeles County Superior Court naming Morgan Stanley as a cross-defendant and alleging “misrepresentation” about investments by a limited partnership Moy was involved with. The case is listed as pending.