) has been hit with a double whammy. While the bank has agreed to
enter into a $4.2 million settlement with the client services
associates, it has also been ordered by a Financial Industry
Regulatory Authority (FINRA) arbitration panel to pay $4.5 million
to Citigroup Inc's (
) Banamex unit.
In the first case, the leading investment broker was accused of
wrongly denying overtime payment to the client services associates.
The second case by Banamex, pertains to the firm using a family
trust account fund to repay third-party loans without its
Three client services associates Philips Amador, Sylvester Cetina
and Joann Sunkett in the retail brokerage branches indicted Morgan
Stanley of violating federal and state labor laws in 2011 when it
did not pay them for the extra time worked after 40 hours a
week. This $4.2 million settlement finally ends the
three-year old litigation.
Again, in the other case filed by Banamex in 2012, a FINRA
arbitration panel found Morgan Stanley guilty. A banking unit of
Morgan Stanley held and managed the trust account of a family, of
which Banamex was a trustee. However, Morgan Stanley improperly
used the trust's money for paying off third-party loans.
Notably, another big bank, JPMorgan Chase & Co. (
) has been sued by an Indianapolis church over fraud and
mismanaging of church trust accounts (Read more:
JPMorgan (JPM) Sued over Mismanaging Church Trust
For a reputed financial institution like Morgan Stanley, this
ongoing spate of settlements and accusations could adversely impact
Morgan Stanley currently carries a Zacks Rank #3 (Hold). A
better-ranked investment brokerage firm is Piper Jaffray Companies
). It sports a Zacks Rank #1 (Strong Buy).
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