We previously posted that FINRA has imposed a $3 million fine against Morgan Stanley; the firm must also fork over a $9.5 million “Discovery Fund,” all to benefit customers in settlement of the firm’s failure in securities arbitration to produce emails ostensibly “lost” in the tragic World Trade Center attacks in 2001 (some of which “surfaced” years later). In fact, Wall Street’s email record retention has had a checkered track record at a number of firms. Several years ago for example in December 2002 the SEC, NASD and NYSE imposed an $8.25 million penalty against Deutsche Bank Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Salomon Smith Barney Inc., and U.S. Bancorp Piper Jaffray Inc. for failure to maintain and/or preserve email communications. Read the rest of this entry »

When Morgan Stanley Co.’s former affiliate, Morgan Stanley DW, Inc., withheld e-mail evidence from litigants for several years, on the shameless pretense that they were “lost” in the aftermath of the September 11, 2007 attacks on the World Trade Center in New York, it was estimated by FINRA that several thousand customers were affected. The suppression of important evidence may have potentially denied securities arbitration and court litigants the ability to recover on some or all of their claims filed in court or at the self-regulatory, industry run arbitrations such as those administered by FINRA and its predecessor dispute resolution forums (the NASD and NYSE). The failure to produce such evidence during the pendency of cases would also have had a profound effect on the amounts accepted in settlements. Read the rest of this entry »

Making Securities Arbitration Fair for Investors: NASAA, the North American Securities Administrators Association committed to investor protection, has come out strongly in favor of “prohibiting broker-dealers from requiring investors to accept mandatory arbitration clauses” and in support of passage of the “Arbitration Fairness Act of 2007,” which is pending in both the Senate (S.1782) and the House of Representatives (H.R. 3010) in the U.S. Congress. Read the rest of this entry »