My grandparents and family lost their retirement savings because of unethical misconduct by Morgan Stanley and E*TRADE from Morgan Stanley (Morgan Stanley Etrade). Legally preventing unethical financial misconduct and stopping Morgan Stanley Etrade from preying upon the vulnerable elderly is essential because YOU or your loved ones may lose future retirement savings! Everyone will be elderly someday.

Morgan Stanley Etrade victims are vulnerable and elderly. According to the U.S. Consumer Financial Protection Bureau, elderly Americans lose an estimated $2.9 billion annually due to financial exploitation, including unethical practices by some financial advisors [1]. Seniors can have significant retirement savings they hope to pass on to family members, and financial predators know this and target the elderly.  

Help is not on the way - toss a coin instead. Unfortunately, the odds of winning a financial misconduct case are about the same as a coin toss - 50%. FINRA admitted only 53%-64% of customers win misconduct claims against financial advisors [2]. The more significant problem is that attorneys can be expensive, which could double the loss. Furthermore, the legal costs of the financial firm would likely be awarded against the victim if they lose a court case.

Hidden skeletons in the closet. You may be unaware that your financial services firm has a deleted misconduct record. Financial firms are permitted to apply to have their misconduct record expunged (deleted) using the FINRA 2080 waiver form [3]. Once the documents are expunged, there will be no evidence trace of any misconduct complaints. 

Morgan Stanley Etrade misconduct is huge! Morgan Stanley Etrade paid approximately $3.2 Billion (USD) in misconduct fines over the last decade to the Financial Insurance and Regulatory Authority (FINRA),  SEC, NASD, and other agencies [4]. There are 1707 financial misconduct disclosures against Morgan Stanley Etrade at FINRA [4]. For example, Morgan Stanley Etrade was fined $1.6 Million (USD) in March 2024 for more unethical behavior [5]. FINRA so recently fined Morgan Stanley Etrade $5 million for deceptive sales tactics [6]. There are 87 financial grievances against E*TRADE from Morgan Stanley on the Complaints Board [7]. There were 35 more complaints registered with the Better Business Bureau (BBB) in 2024 [8]. Morgan Stanley is now not registered with the BBB [8] - that is a clever strategy to avoid negative publicity. 

Morgan Stanley Etrade misconduct is a global issue. Morgan Stanley Etrade misconduct is a global problem because they are a multinational corporation. They admitted: "E*TRADE has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley’s existing 3 million client relationships and $2.7 trillion of client assets" [9]. You may not even realize they could indirectly be paid fees through one of their subsidiaries to manage your retirement savings.

Legal professionals claim Morgan Stanley Etrade is unethical. Rosen Law Firm (Rosen) in New York initiated a class action lawsuit against Morgan Stanley, alleging that Morgan Stanley issued materially misleading business information to the investing public [10]. San Franciso Joseph Saveri Law Firm has an ongoing antitrust consumer protection class action case against Morgan Stanley Etrade and other firms [11]. The Miami-based Blum Law Firm (Blum) is also suing Morgan Stanley Etrade for $100 million for failing to provide numerous unhappy clients with potential relevant evidence for their cases [12].

Academic researchers found Morgan Stanley Etrade was unethical. It is not just law firms who think Morgan Stanley Etrade is unethical. Illinois academic scholars Egan, Mavos, and Seru [13] analyzed 8 million records from FINRA’s data. They found that one in every thirteen (7.27%) financial advisers had a misconduct-related disclosure on their record, and 27% were repeat offenders. - they warned: “this evidence suggests that some firms specialize in misconduct” [13, page 31]. 

California academic scholar Honigsberg and Harvard University scholar Jacob [14] went even further by analyzing FINRA’s expungement data - which contains financial advisors who had their misconduct criminal behavior records deleted. They found: “successful expungements predict future misconduct; brokers with prior expungements are 3.3 times as likely to engage in new misconduct as the average broker” [14, page 4]. 

Honigsberg and Jacob found Morgan Stanley Etrade had the “highest number of expungements, 572, relative to misconducts” of all financial firms in the FINRA database [14, page 41]. Honigsberg and Jacob cautioned FINRA that allowing financial advisors to delete their misconduct records is wrong. 

Oklahoma-based Public Investors Advocate Bar Association Foundation (PIABA) asserted that expungements should be stopped because financial firms have been gaming FINRA’s arbitration system for years. Doss and Bragança [15] explained that firms include $1 for damages to reduce the number of arbitrators reviewing expungement requests and to make it cheaper for firms to get customer complaints expunged (deleted) and then withdraw the $1 of damages at the expungement hearing. 

Morgan Stanley Etrade fabricated evidence and lied. More than one misconduct victim alleged Morgan Stanley Etrade lied, fabricated evidence, and refused to provide critical evidence, including financial advisor recordings of customer advisement meetings [16]. It is nearly impossible for victims to win financial misconduct cases if the perpetrator can simply delete their evidence and lie about what happened. 

FINRA hoarding the fines revenue. FINRA admitted in 2021 that they collected "$103 Million (USD) in fines" but returned only "$47 million in restitution to harmed investors" [17, pages 3, 9]. The problem is that FINRA did not return the remaining $56 million (USD) to victims of financial misconduct. 

Where does FINRA money go? The top five FINRA executives were paid $8,270,000 ($8.3 Million USD) in 2022 [17, page 24]. FINRA CEO Robert W. Cook was paid $3,150,000 in 2022, which was down a little bit from his 2021 salary of $3,296,195 [18, 17, p. 24]. Mr. Cook has been earning a substantial wage for years [18]. US Congress recently grilled FINRA about the high executive salaries and lack of oversight [19].

FINRA employee discrimination? By comparison, Mr. Gensler, CEO of the SEC and supervisor of Mr. Cook, had a base salary of $311,235 - according to the Senior Officer Pay Chart for levels 2-3 [20]. This has already become an issue investigated by the U.S. Congress. 

FINRA corruption? In one high-profile case, attorneys argued that FINRA arbitrators are not government employees and should not be enforcing the SEC's federal laws [21].

FINRA salary discrimination. The problem is that the buck stops at the FINRA executives - FINRA employees who perform the labor of helping victims of financial fraud are not paid fairly. FINRA pays the arbitration panel members $600 per 8-hour hearing on a contract basis [22]. In contrast, arbitration chairs are paid $850 [22]. The problem can be seen by considering that even if an arbitration panel member completed 10 cases, each with a full-day hearing, that would be an annual salary of $6,000-$8,500. Would any competent legal professional work at those wages? How could elderly victims of financial misconduct obtain a fair hearing of their complaints if the FINRA system is corrupt?

U.S. Government decision-makers need to fix this problem for YOU. Mr. Gary Gensler, as the CEO of the U.S. Securities and Exchange Commission (SEC),  oversees FINRA, so he has the power to force Morgan Stanley Etrade to pay back elderly victims of financial misconduct. He can also force FINRA to repay elderly victims through the revenues received from financial misconduct, including the fines paid by Morgan Stanley Etrade. He can order FINRA to stop deleting financial misconduct records.

The key decision-makers we are asking to help are U.S. Congress Financial Services Committee leaders Patrick McHenry (GOP Chairman), Ann Wagner (Capital Markets), Bill Huizenga (Oversight and Investigations), and Blaine Luetkemeyer (Illicit Finance) [23]. 

You can help just by signing. Please help prevent your loved ones or you from becoming victims of financial advisor misconduct (your name or donation is optional - anonymity is guaranteed). 

SOURCES

1. Consumer Finance (2024): https://www.consumerfinance.gov/consumer-tools/educator-tools/resources-for-older-adults/protecting-against-fraud/
2. FINRA (2024): https://www.finra.org/arbitration-mediation/dispute-resolution-statistics
3. FINRA (2024). 2080 Waiver. https://www.finra.org/registration-exams-ce/classic-crd/faq/finra-rule-2080-frequently-asked-questions/waiver-request-form
4. FINRA (2024). Broker Check Morgan Stanley Etrade:
   https://brokercheck.finra.org/firm/summary/149777
   https://brokercheck.finra.org/firm/summary/7556
   https://brokercheck.finra.org/firm/summary/8209
   https://brokercheck.finra.org/firm/summary/29106
   https://brokercheck.finra.org/firm/summary/34925
   https://brokercheck.finra.org/firm/summary/11643
   https://brokercheck.finra.org/firm/summary/30992
5. FINRA (2024). In March 2024, Morgan Stanley were fined 1.6 million by FINRA. https://www.finra.org/media-center/newsreleases/2024/finra-fines-morgan-stanley-1point6-million-municipal-securities 
6. Stockattorneys (2024): https://www.stockattorneys.com/finra-castigates-prodigious-morgan-stanley-smith-barney-for-supe.html
7. Complaints Board (2024): https://www.complaintsboard.com/etrade-financial-b126415
8. BBB (2024): Better Business Bureau (BBB) Registered Company Complaints. https://www.bbb.org/us/va/arlington/profile/trade-exchange/etrade-financial-holdings-llc-0241-18179/complaints?page=35
9. MS. (2020, February 20). Morgan Stanley to Acquire E*TRADE | Morgan Stanley (MS). https://uat.morganstanley.com/press-releases/morgan-stanley-to-acquire-e-trade
10. Rosen Law Firm (2024): https://www.businesswire.com/news/home/20240412336234/en/TOP-RANKED-ROSEN-LAW-FIRM-Encourages-Morgan-Stanley-Investors-to-Inquire-About-Securities-Class-Action-Investigation-%E2%80%93-MS
11. Joseph Saveri Law Firm (2021): https://www.classaction.org/media/cheng-et-al-v-ally-financial-inc-et-al.pdf
12. Blum (2024): https://www.stockattorneys.com/morgan-stanley-faces-suit-tied-to-new-evidence.html
13. Egan, M., Matvos, G., and Seru, A., (2019). The market for financial adviser misconduct. Journal of Political Economy 127 (1), 233–295. Retrieved August 9, 2022 from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2739170 
14. Honigsberg, C. and  Jacob, M. (2020). Deleting Misconduct: The Expungement of BrokerCheck Records. Journal of Financial Economics, Available at: http://dx.doi.org/10.2139/ssrn.3284738 
15. Doss, J. R., and Bragança, L. (2019). The PIABA Foundation 2019 Study on FINRA Expungements: A Seriously Flawed Process That Should be Stopped Immediately to Protect the Integrity of the Public Record (Financial Advisor Misconduct, pp. 1–29). Public Investors Advocate Bar Association Foundation (PIABA at https://piaba.org/contact
    https://secdefenseattorney.com/wp-content/uploads/2019/12/Expungement-Study-101519-FINAL-VERSION.pdf 
16. FINRA Award 20-01792 Vacated Due to Arbitrator Panel Misconduct. https://www.finra.org/sites/default/files/aao_documents/20-01792%282%29.pdf
17. FINRA (2024) Revenue and Executive Salaries. https://www.finra.org/sites/default/files/2022-06/2021-FINRA-Financial-Annual-Report.pdf
18. Financial Advisor (2021): FINRA CEO Salary Dips. https://www.fa-mag.com/news/finra-ceo-salary-dips-to--3-12-million-as-fines-soar-62854.html
19. US Congress Grill FINRA (2023). https://www.advisorhub.com/lawmakers-grill-finra-ceo-seek-to-rein-in-the-regulator/
20. SEC Salaries. SEC (2024): https://www.sec.gov/about/careers/sec-compensation
21. Politico (2023): https://www.politico.com/newsletters/morning-money/2023/08/17/the-lawsuit-that-could-kill-wall-streets-industry-regulator-00111572
22. FINRA (2024): Arbitrator Payments. https://www.finra.org/rules-guidance/rulebooks/finra-rules/12214
23. US House of Representatives Financial Services Committee. https://financialservices.house.gov/about/jurisdiction.htm