Morgan Stanley Axes Institutional Broker over Outside Business
The co-founder of a rapidly growing Morgan Stanley Wealth Management team that works with institutional clients has been discharged for violating the firm’s outside business restrictions.
The Stenner Zohny group had discretion over $576 million in client assets when they joined the wirehouse from Canada’s Richardson GMP in March 2017, Morgan Stanley said at the time. Assets under management have soared to $18.5 billion, according to Barron’s, which ranked the team #8 in its 2020 list of Top 50 Institutional Consulting teams.
Morgan Stanley could not identify any clients who Stenner may have asked to invest in the private company and did not allege that he had received any payments, according to BrokerCheck.
Its decision to nevertheless expel him underscores firms’ growing intolerance of violations that can cause them to lose oversight of advisors’ personal finances or identify red flags that could prompt illegal sales practices, according to securities lawyers. The Financial Industry Regulatory Authority has become increasingly aggressive about pursuing advisors who violate their firms’ outside business policies.
Stenner, a former chairman of the Canadian chapter of TIGER 21, a high-net-worth investor peer group organization, did not return a request for comment sent through social media about the allegations. A Morgan Stanley spokeswoman declined to comment.
Youssef Zohny, who co-founded the team with Stenner in 2011, remains at Morgan Stanley along with a junior advisor and four associates, according to their team page and BrokerCheck record. Zohny did not return a request for comment.
The group, which vaulted to the upper tenth of Barron’s rankings from #27 in 2019, works with trusts, foundations, endowments, family offices and ultra-wealthy individuals with over $50 million in assets, according to the magazine.
Stenner and Zohny moved to Silicon Valley from British Columbia when they joined Morgan Stanley from Richardson. Prior to his 10 years at Richardson, Stenner worked at Merrill Lynch International and CIBC World Markets, according to his web biographies.
Stenner lists three outside business activities on his investment advisor regulatory report. He is a director of Staunch Investments, a vehicle for investing $1 million or more in Vannedge Capital, sole owner of True Wealth Enterprises, described as a personal holding company, and a board member of Chimp Technology, an online fundraising platform for Canadian charities.
Finra in late October suspended a former Merrill Lynch broker who allegedly introduced celebrity clients to people raising money for outside ventures without the firm’s permission. That followed a series of actions by the regulator this summer against brokers who failed to get their firms’ written permission to engage in outside business activities.