Times can get complicated when a broker was romantically involved in the past with a client. Sometimes seemingly good contacts are not so good. Then charges and countercharges fly back and forth. A prior sexual relationship may or may not have influenced this case. A lot of money was lost.
We emphasize that the information below relates to a FINRA “complaint.” Always, as part of our Blog and general practice, the reader must await the “other side of the story” as to the complaint. But, previously, a FINRA arbitration Panel ordered payment of $34 million to the estate of Home Shopping Network co-founder Roy Speer because of unauthorized trading, churning and other violations by Ms. Forte. Ms. Forte was fired in March 2016 by Morgan Stanley. But a lot of the facts seem to have been established by an Arbitration hearing which preceded the FINRA Complaint.
The fundament of the FINRA complaint and preceding arbitration, of course, was churning of a customer’s account. http://www.BrokerFraud.Net
The record in the Arbitration reflected that Ami Forte and her associate purportedly generated $9 million in commissions. 2,800 trades were involved in 2011 and 2012 as to the Speer accounts managed by Ms. Forte. That’s a lot of trading ! The sheer number of trades raises eyebrows.
The new Proceeding is a FINRA complaint against Forte and was subsequent to the initial arbitration proceeding.
Churning involves unauthorized trading of any account for the purpose of generating commissions for the broker’s benefit. Many other factors are considered. Expert witnesses many times are called at hearing. Some of the components are control of the account by the broker, annual account turnover and the commission to equity ratio. But here is a summary of some interesting aspects:
The complaint stated that Speer, was once romantically involved with Forte. To what extent this bore on the finding of the Arbitration award was unclear. The later FINRA enforcement complaint stated that Speer suffered from “severe cognitive impairment.” Many times, assertion of churning and unsuitability claims depend on the customer’s inability to know what is transpiring in his/her account because of physical or mental disability; a conclusion that the account was “controlled” by the broker is important is delivering a FINRA award for unsuitable investments, churning or unauthorized trading.http://www.BrokerFraud.net
The earlier Arbitration Panel concluded that the account was “churned” and awarded $34 Million.
Ami Forte, has challenged efforts to collect millions of dollars to cover her part of the Arbitration Award. Forte has also counterclaimed for almost $2 million of deferred compensation, denied the charges. Forte also charges that there was collusion by FINRA with Morgan Stanley.
Forte stated in part: “Enough is enough. It’s time for Finra to stop being Morgan Stanley’s lap dog. FINRA is supposed to regulate Morgan Stanley, not do its bidding.” FINRA has not responded because the matter is in litigation.
FINRA’s Enforcement Division asked the regulator’s Office of Hearing Officers for monetary sanctions. Determinations were also requested for excessive trading, unsuitable recommendations and that Forte and her associate transgressed Federal Exchange Act and Municipal Securities Rulemaking Board rules.
Forte’s lawyer on Friday repeated past assertions that Morgan Stanley showed bias in allowing male executives to leave with severance packages while allegedly dunning his client.
Forte defended herself in a prepared statement:
“It’s typical of Finra’s strong-arm and coercive tactics to file a series of absurd claims against me just days before Christmas,” she said.
Anthony M. Abraham, Esq., PC is experienced in churning and unauthorized trading claims. If you suspect that your account has been churned, please call us Toll Free at 1-877-430-4877 for a Free Consultation or email us at Anthony@Abrahamattorneys.com.http://www.BrokerFraud.Net