Tuesday, August 16, 2016

Morgan Stanley settles with SOS for $4.7 million

Secretary of State Gibbit Hosemann issued the following press release:

Secretary of State Reaches $4.7 Million Settlement with Morgan Stanley Arising from Investigation of Advisers in Ridgeland Office

Jackson, MS—Secretary of State Delbert Hosemann has reached a settlement agreement with the investment firm Morgan Stanley Smith Barney, LLC (“Morgan Stanley”) which maintains a local branch office in Ridgeland, Mississippi.  Morgan Stanley will return up to $4,243,815.28 to investors.

In addition, Morgan Stanley will pay an administrative penalty of $100,000 to the State and will reimburse the Division’s investigative costs of $400,000, for a total settlement amount of $4.7 Million Dollars.

The settlement concludes a comprehensive, multi-year investigation conducted by the Securities Division of the Office of the Secretary of State into complaints from customers who had investment accounts with financial representatives at the Ridgeland branch office and who suffered inordinate losses. 

 “This is a significant settlement which is a culmination of hard work by the Division on behalf of investors,” says Secretary Hosemann. “It exemplifies the important investor protection role the Agency serves to safeguard our citizens through fair regulation and enforcement and hopefully deterrence.” 

The Consent Order cites violations of Mississippi’s Securities regulations committed by Morgan Stanley and its financial advisors in the Ridgeland branch office over a four year period. 

Without admitting or denying the Division’s allegations, Morgan Stanley has agreed to resolve the investigation by establishing a customer fund of $4.2 Million Dollars, which will return a portion of the account losses to eligible customers who elect to participate. 

This fund will be funded by Friday, September 9, 2016.  No customer is required to participate in this settlement.  Participation is entirely voluntary and any customer affected may choose not to participate and pursue any legal remedy they deem appropriate. 

The customer fund has been set up for the benefit of two hundred fifty-nine (259) accounts held by two hundred thirteen (213) investors from fifteen (15) states.  In Mississippi, one hundred ninety-four (194) accounts were affected.  Other states include Alabama (4), Arkansas (5), Arizona (2), California (2), Florida (5), Kentucky (2), Louisiana (25), Minnesota (1), North Carolina (4), Oklahoma (1), Pennsylvania (2), Tennessee (7), Texas (4) and Washington (1). 

The Secretary of State’s Office will send letters to the eligible customers to notify them about the fund and give them an opportunity to participate. The customers who elect to participate must return a signed notarized settlement agreement to Trustmark Bank in order to receive a payment.  Trustmark Bank will process the agreements and issue the checks.

“Our office follows up on complaints as to violations of Mississippi security laws and takes regulatory action when we discover this type of activity,” states Secretary Hosemann.  “Mississippians work too hard for their savings to be lost from these types of reckless activities.”

A copy of the Consent Order containing the details of the settlement will be available on the Secretary of State’s website at www.sos.ms.gov. Investors with questions about the Consent Order may contact the Securities Division at (601)-359-1334.


Anonymous said...

Sounds like Criminal Conduct!!!

Anonymous said...

Fish has followed this story since the beginning - I appreciate the diligence. That being said, I have never take the time to dig into the details to understand exactly what the SoS accused Morgan Stanley of doing. The Morgan Stanley employees in the Ridgeland office are account managers that grab clients and "advise" them on where to invest their money. They aren't actually making the investments or any other big-brained decisions - they are just salespeople. Were they putting people in Morgan Stanley-specific investment vehicles that were somehow fraudulent? If so, why isn't this a national issue?

Any elucidation or links to a more detailed background appreciated.

Anonymous said...

Are outside lawyers getting 40% like Hood pays out to his cronies?

Anonymous said...

@1:14: No. The money is going in a fund for investors. Morgan Stanley is reimbursing the investigative costs.

Anonymous said...

There was a Wall Street Journal article on July 28, 2015, which discusses a $2.3 million arbitration award to Morgan Stanley customers. Google the headline "Morgan Stanley Told to Pay More Than $2.3 Million in Arbitration Case." I believe that case involves the same conduct which was the subject of the Secretary of State's settlement with Morgan Stanley.

Anonymous said...

The State Treasurer's office has a contract with Morgan Stanley for $240,000 to advise the MPACT staff how the trust fund money should be invested. Anoth one of Fitch's deals!

Anonymous said...

Fitch SAVED MPACT after Tater slept at the wheel.

Anonymous said...

4:12 - you are supposed to be working on official state business since it was before 5 when you used your State Treasurer's office computer to post.

Anybody that buys Fitch's b/s about 'saving IMPACT' has to be dependent on their Treasury Dept paycheck; otherwise they would realize the entire JG driven PR campaign about the status of the program.

In the meantime - how's Fitch's management over at PERS going?

Anonymous said...

Friday, September 18, 2015
Local Morgan Stanley Branch Churned & Pumped Away in Multi-million Dollar Fraud

"A Financial Industry Regulatory Agency (FINRA) arbitration panel awarded $2.5 million in damages, fees and attorney's fees against Morgan Stanley, Morgan Stanley Smith Barney, and several current and former employees. The panel determined Morgan Stanley broker Steve Wyatt and other employees churned trades and committed fraud, as six investors lost millions. The victims are Dr. Lon Lutz, Dr. Rahul Vohra, Sherry Vohra, Barbara Carter Summers, Dr. Jeff Summers, and Dr. Michael Winkelmann.

The victims filed a complaint against Morgan Stanley, Steve Wyatt, Hilary Zimmerman, and Fred Brister, III in 2012. Brister is the branch manager. FINRA did not publish the complaint, but did post a final order on July 24 on its website. Wyatt responded to the complaint but did not sign a submission agreement.

The formal language used by FINRA states:"

Anonymous said...

filbert is by far the most (only) intelligent star official that we have.

Anonymous said...

This paltry settlement with Morgan Stanley is a joke! Horseman and his office claim they are looking out for the citizens of MS which is far from what they do! He failed to mention that the only people who were fully compensated for their losses was his office!!! Then, to impose a ludicrous $100,000. fine on Morgan Stanley is just unbelievable! Im sure they had to go to their coffee kitty to scrape that amount up! The SOS had enough documentation on the corrupt trading practices to have forced Morgan Stanley to fully restore these clients losses! Instead, they dropped the ball and agreed to this ridiculous amount! Hoseman stands up and crows about getting over four million back for these clients, that is chicken feed compared to what they lost! The clients will only be receiving about 15 cents on the dollar of what they lost. That, of course, does not include what that money would be valued at on today's market. Furthermore, as one of those clients who lost over $350,000 with Morgan Stankey, I am insulted at Hoseman's condescending comments which implied it was the client's fault because the clients did not read what they signed, nor did they keep up with their accounts. Shame on you Hoseman, and your weak little office!!!

Anonymous said...

I naively thought that Hosemann would force Morgan Stanley to repay what they stole from their clients! Of, course the "Good Ole Boy,
Status Quo," never changes in MS! Hosemann, you had these bastards by the balls, why did you settle for that pennies on the dollar???? Did you consult with any of these clients to find out if they would be happy getting fifteen cents per dollar that we lost? Did you contact any of them prior to this announcement and invite them to attend and ask questions? No, of course, you didn't! You stood on your soapbox and bragged about getting over 4 mill for the clients when you could have gotten them the 50 million that MS stole from them. Then you had the arrogance to shake your finger at the clients and tell them they should read what they sign and watch their accounts!! How the hell do you think you know what we did??? But, it wasn't about the clients was it Hosemann? It was about you!!!

14th Check.. said...

Fitch doesn't 'manage' PERS. Nice try.

Anonymous said...

How does the SOS have any say in litigation for the state of ms?

Where was Hood on this?

Kingfish said...

SOS referrals for criminal prosecution go to Hood's office where they die.

See Steadivest.

SOS should have the authority to prosecute criminal violations in securities and charities fraud cases.

Anonymous said...

The real mystery is why SOS let Morgan Stanley off for only $4 million.They removed $50 million of Mississippians life savings from their pockets. Mississippi can't afford such losses. Morgan Stanley can pay $50 million for longer than any of us can live. An out of state company gets a great deal from SOS who is charged with protecting his constituents from just this sort of thing. What is wrong with this picture and why did Mr.Hoseman cut such a sweetheart deal with such a loathsome international company
that swindled his own supporters? It really doesn't make sense or add up. What do you think?

Anonymous said...

Fred Brister is Delbert's friend. What did you expect?

Anonymous said...

Delbert got rid of several employees who had real securities experience. What he has now is laughable. If you think Delbert does any of this work, think again. It's all done by employees.

Anonymous said...

Fish - the SOS is not the States attorney. Just because we have a crappy AG is no reason to be giving Gilbert or any future SOS prosecutorial powers. Current SOS thinks his shirt doesn't stink and that he ought to be in charge of everything. But because he won't let anybody work there if they have the ability to think for themselves we damn sure ough not be giving him that kind of power.

Anonymous said...


To listen to her she does. (She is vice chairman of board) just like she tries to claim she is in charge of bonding programs of state - where she is one of three members of commission.

Anonymous said...

Steve Wyatt is a good guy. He had great returns for the previous 15 years up to the financial crisis. If the cl is right and the clients losses were around 50%, this is actually better than what the s&p did during this time frame. He was one of my favorites while at Smith Barney. I don't know any details but he was a short term trader and did very well at it until he didn't, but neither did the market in general and most other managers.

Anonymous said...

I would not trust my money with one of those people if my life depended on it. Just give me the low CD rate and let me sleep at night knowing I can walk down the street and get my money. I live very well and most of these people live better than I do---that tells me something. Wyatt and Zimmerman may be great guys but so was Bernie Madoff. No one can watch your money better than you. I have never lost one dime with a Certificate of Deposit.

Anonymous said...

The facts are that neither Brister, Wyatt, nor Zimmerman are anything but serious low lifes. That which they did to friends and clients is inexcusable and they truly do not own up to that in any way.They deserve to be shunned by all.

Anonymous said...


There are financial advisors who put commissions over clients and they are bad for doing so but no financial advisor's lose clients money on purpose. What he 'did to clients and friends' he did to himself also. I will admit that I do not know all the facts in the case but if his client's loses were 50% when the s&p dropped 57% it sounds like sour grapes to me and jackpot justice to the lawyers. Wyatt's trading style, heavy turnover and short term trading was the same over the past 15 years yet no one was complaining when he was making them good money.

Anonymous said...

Before some of you get on your sanctimonious soap boxes, you need to learn the facts! The, as you say "good guys," are criminals! They committed fraud, perjury, forgery, theift, engaged in front running, and failed to disclose pertinent facts to clients.These are only a few things these good guys did! Their losses were will above what the S&P lost. And no, they didn't lose like their clients did, they took their money out of the market, but failed to mention this to the clients. Do your homework before you state your opinion. It really makes you look uneducated otherwise!

Anonymous said...

Following up on the last comment. The financial firm you deal with makes a world of difference. I came from a great firm Legg Mason who always made sure that the client came first. When we were purchased by Smith Barney all of that changed. As with all of the big wire houses ML,MorganStanley,UBS etc the client comes last with the firm putting it's interest ahead of both the client and the brokers Anything you did to help the client you were penalized as the broker and the main push was all about increasing fee's at the clients expense. I went to full cash on many fee accounts during early 08 and got calls from management to get the clients back in the market because the clients did not pay fees on uninvested assets. Out of the 30+ brokers that SM bought, only 2 remain. The rest sought greener places that allow you too put the client first. In saying all of that, I know a lot of brokers in Jackson and there is only a handful that I would allow to manage my money.

Anonymous said...

' They committed fraud, perjury, forgery, theift, engaged in front running, and failed to disclose pertinent facts to clients' Perhaps i'm uneducated for not knowing all the facts, but if Wyatt committed fraud, perjury, forgery and theift he would be facing criminal charges which to my knowledge he is not. As for the facts that I have are only the ones presented here and the Clarion Ledger which stated 50% losses for his clients which is less than the market. Maybe the CL gave the wrong % losses. Yes,according to friends at MS, wyatt blew his own acct up also. I would think that MS (like most firms have controls in place to prevent brokers from front running clients). As for the failure to disclose pertinent facts, I'm sure the clients missed the fine print that you could lose money on your investments or could figure out that he was extremely aggressive after a few statements as his fund was ran similar to a hedge fund without the performance fees. I don't know anything about Zimmerman and Brister's involvement with the actual management of the funds so I can't comment on them. Not knowing all of the details other than what is presented here and the Clarion Ledger (which is my only homework) My opinion is still the same 'sour grapes and jackpot justice.' If the client risk was not suited for his fund they should have got out once they saw all the trade confirms coming in. It was marketed as aggressive growth by the way. Not saying your facts are wrong; i'm just going with what is presented here and the CL. Peace

Anonymous said...

Thanks to that previous comment! It is good to know that there are some investment companies out there that are honest, ethical and abide by the fiduciary responsibility of licensed money mangers who, by law, are obligated to put client's welfare first. This mess with Morgan Stanley is deplorable. If they were the fine upstanding company they portray themselves to be, they would "Man Up," and reinstate their clients for their losses, admit they had some criminals on their staff, apologize for their actions and do the right thing. Instead, they are spending millions fighting and denying all allegations that have clearly been proven. When happened to doing what is right? Have we reached so low in our society that being honest and doing the right thing is somehow not admirable?

Anonymous said...

There are some inane comments here. As a fool who stayed with WonderBoy (Wyatt) guided there by a extraordinarily profane ex-priest, stock shill and former friend (Zimmerman) and protected (not) by a branch manager who had stupidly paid Wyatt and Zimmerman over $3 million cash in 2007 to come to his office (Brister - how did that work for you Fred?) I can give you my numbers:
2008: Start mid Feb. - my accounts minus 48.7%; S&P 500 minus 32.1% (Wyatt 50% WORSE)
2009: Full year - me + 6.1%, S&P 500 +26.5%, Russell +40%; (Wyatt 80-90% WORSE)
2010: Full year - me- +16.4%; S&P +15.1%
2011 Full year - me MINUS 27%; S&P +1.97%, Doe Jones +6% (Wyatt worse by INFINITE amount)

Those are facts. Wyatt lost over 50% of my investments CUMULATIVELY from 2008-2011 while the averages went down and then up to the point of near total recovery. Perhaps the worst money management record in the world for that 4 year period! There are numerous reasons for this that should not have been countenanced and allowed to continue by Morgan Stanley- very serious reasons that are disgraceful and illegal (or should be). The only "Jackpot Justice" involved here is the windfall MS got from SOS by having to pay only $4 million instead of the $50 million Delbert's constituents and supporters (many now former) lost in this fiasco. These are the facts. If it had happened to anyone they would be justifiably irate.

Anonymous said...

My belief is that an aggressive fund is just that very aggressive. It sounds like your risk tolerance was too low to be invested as such. You should have been informed of the financial risks of investing in such a fund and got out of it if it was not suitable. However, I'm sure that Zimmerman was very persuading to keep you in the fund and to me that is worse that the actual losses if the fund was not suitable for you. Those returns do suck but there is a big difference in criminal negligence and piss poor performance. The investor should due his diligence and know what he is investing in.

Anonymous said...

This Morgan Stanley deal set back trust in Jackson stock brokers some 30 years. They are the ones who should be most angry with MS and the SOS

Anonymous said...

Wyatt's managed accounts were not "aggressive" (Ken Hebner's funds are aggressive), they were truly an insane mix of self-dealing (white collar theft) in obscure, thinly traded penny ( under $5) stocks that were bought in client accounts AFTER Wyatt bought them in his and his wife's personal accounts at lower prices (then sold MUCH higher than clients eventually got) and manic trading induced by Wyatt's "personal problems" (don't ask). Wyatt and Zimmerman did indeed sign/copy client names on to documents (mine was one).Their sworn testimony in arbitrations (mine included) was absolutely scripted and false.This is a very ugly story and by far the only winner was Morgan Stanley who got off incredibly light. They should pay their out of state lawyers well for this trick. Why SOS favored MS over his own people seems to be a terrible political move. SOS must have a serious motivation to favor the creators of the 2008 financial crises over the very people he swore to protect. A very serious motivation.

Anonymous said...

If that was the case of front running penny stocks and forging paperwork, accept my apologies and MS should have their doors closed in that situation. Wyatt in the past did not manage his accounts as such. I don't have any sympathy for any broker lying or misleading clients and putting them in investments that are unsuitable or not disclosing the risks. Based on the story presented here and the CL it looked to me as another case of the market goes down and the overzealous lawyer looking to capitalize on the situation. It happens very often. Overlook my comments above, if this was the circumstance. I wish for any broker defrauding clients get the book thrown at them as well as the firms who would condone such behavior. At the same time I feel the same way about lawyers who go after brokers due to poor performance due to poor market conditions.

Anonymous said...

Delbert didn't want to piss off his buddies at Morgan Stanley. His office had proof of many securities violations and probably had enough to shut them down, but didn't.

It is disgusting how light the fines and "client compensation" fund are. This isn't the first time Delbert's "friends/contributors" have gotten off light.

Anonymous said...

Did Chris Epps lose any of the money that he extorted
in his crimes?

Anonymous said...

@3:26 Front running penny stocks, unauthorized trading, forging documents, perjury.... that is just the tip of the iceberg! Please don't defend anyone if your information is the basis of what you read in the Clarion Ledger; that alone will make you look bad. I was a client, I spoke to the SOS office and asked what do I need to do? Where do I go to press charges? I was told this is all you need to do, coming here is enough. We will handle it from here. THIS DEAL IS NOT ACCEPTABLE! Morgan Stanley makes BILLIONS in profit every year and this is settlement is nothing to them. Upper management knew of the problems and turned a blind eye. This is not a deterrent or a punishment for Morgan Stanley. Barring Fred Brister and Steve Wyatt from working in the security industry is a joke. Fred is just retiring and headed to golf with his good ole boys. I am more than willing to press criminal charges against Wyatt and Brister. Where do I go????

Anonymous said...

AG or Madison county DA

Suscribe to latest on JJ.

Recent Comments

Search Jackson Jambalaya


Subscribe to JJ's Youtube channel

Who is the hottest reporter?


Who is the Hottest Reporter in Jackson?

Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

Meet KIM Waaaaaade at the Entergy Tent. For five pesos, Kim will sell you a chance to win a deed to a crack house on Ridgeway Street stuffed in the Howard Industries pinata. Don't worry if the pinata is beaten to shreds, as Mr. Wade has Jose, Emmanuel, and Carlos, all illegal immigrants, available as replacements for the it. Upon leaving the Entergy tent, fig leaves will be available in case Entergy literally takes everything you have as part of its Trollfest ticket price adjustment charge.

Donna Ladd of The Jackson Free Press will give several classes on learning how to write. Smearing, writing without factchecking, and reporting only one side of a story will be covered. A donation to pay their taxes will be accepted and she will be signing copies of their former federal tax liens. Ms. Ladd will give a dramatic reading of her two award-winning essays (They received The Jackson Free Press "Best Of" awards.) "Why everything is always about me" and "Why I cover murders better than anyone else in Jackson".

In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

Trollfest '09 is a pet-friendly event as well. Feel free to bring your dog with you and do not worry if your pet gets hungry, as employees of the Jackson Zoo will be on hand to provide some of their animals as food when it gets to be feeding time for your little loved one.

Relax at the Fox News Tent. Since there are only three blonde reporters in Jackson (being blonde is a requirement for working at Fox News), Megan and Kathryn from WAPT and Wendy from WLBT will be on loan to Fox. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both and a torn-up Obama yard sign will entitle you to free drinks served by Megan, Wendy, and Kathryn. Get your tickets now. Since this is an event for trolls, no ID is required. Just bring the hate. Bring the family, Trollfest '09 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS.

Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

Note: Security provided by INS