Morgan Stanley Ordered To Pay $130,000 To Florida Couple

The New York Stock Exchange has ordered securities firm Morgan Stanley to pay $130,000 plus costs and expenses to a Florida couple who proved that their broker misled them into retiring early and then sold them unsuitable, risky investments, according

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The New York Stock Exchange has ordered securities firm Morgan Stanley to pay $130,000 plus costs and expenses to a Florida couple who proved that their broker misled them into retiring early and then sold them unsuitable, risky investments, according to the couple’s attorney, James D. Keeney.

At age 58, Carl Demico was earning $75,000 a year when he and his wife Barbara visited Morgan Stanley broker Glenn Yarbrough for financial advice. After examining their retirement accounts and having them fill out a retirement budget, Yarbrough, according to the Demicos’ testimony, assured them they could easily afford to retire and promised the couple a 15% return on their savings. They testified that Carl would never have retired if he and Barbara hadn’t believed Yarbrough’s assurances that he could invest their savings so Carl would never have to work again.

“My clients’ expectation of a comfortable retirement ended in disaster and heartache because their Morgan Stanley financial adviser made irresponsible claims and unsuitable investment recommendations,” said Keeney. “Carl Demico is now working 60 hours a week trying to earn back the money Mr. Yarbrough lost.

“The award exceeded the Demicos’ out-of-pocket losses on the Morgan Stanley mutual funds Mr. Yarbrough put them in,” Keeney said. “This suggests that the arbitrators agreed with our expert, Sean Kelley, that there was no way Mr. Yarbrough’s investment plan could have fulfilled the promises he to made our clients.”

Evidence at the arbitration also showed that the broker’s exclusive use of Morgan Stanley proprietary mutual funds may have been motivated by a secret national sales contest, according to Keeney. “Mr. Yarbrough went on a free trip to a resort in Scottsdale, Arizona, after he put the Demicos into these unsuitable investments.”

“Mr. Yarbrough also made $11,600 in sales commissions on these purchases in a single month. Not bad for just a few hours’ work,” Keeney said. The MSDW funds sold to the Demicos included American Opportunities B, European Growth B, Mid-Cap Equity Trust B and Total Return Trust B.

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