James Glenn Tallant, a broker at Purchase, New York based Morgan Stanley Smith Barney, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint. The complaint alleges that Mr. Tallant exercised control over the customer's accounts by engaging in discretionary trading without written authorization. Mr. Tallant also allegedly exercised de facto control because the customer routinely followed Mr. Tallant's advice and was unable to evaluate Mr. Tallant's recommendations and to exercise independent judgment. FINRA alleged the trading was unsuitable and excessive in size and frequency. The complaint also alleges that the number of transactions in the accounts was excessive in light of the customer's investment objectives and resulted in turnover and cost/commission-equity ratios exceeding those that create a presumption of churning. The complaint further alleges that Mr. Tallant executed or caused the execution of the securities transactions with intent to defraud, and that he knew, or was reckless in failing to recognize, that the trading in the accounts resulted in substantial commissions for him but could not reasonably be expected to benefit the customer. By allegedly executing the improper transactions in the customer's accounts, Mr. Tallant, of Abilene, Texas, allegedly placed his own interests above the customer's interests.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from stockbroker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to prohibited activity such as unauthorized discretionary trades and/or churning can bring forth claims to recover investment losses against broker-dealers like Morgan Stanley Smith Barney, which should monitor their brokers' activities in order to prevent the above described misconduct.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.