Securities Arbitration Lawyer Blog
On August 12, 2020, Morgan Stanley and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) over allegations that it failed to reasonably supervise its former broker Kevin Gunnip. As part of the AWC, Morgan Stanley agreed to pay a $175,000 fine and was censured by FINRA. It also agreed to pay eight clients $774,574 in restitution. Two other customers have already settled separately with Morgan Stanley.
The Morgan Stanley AWC allegations involve Kevin Gunnip’s and its own conduct between 2012 and 2017:
- Gunnip recommended short-term trades in ten customer accounts;
- Morgan Stanley failed to reasonably supervise Gunnip;
- Morgan Stanley failed to review whether Gunnip’s recommendations were suitable;
- Gunnip’s trading in the accounts exceeded Morgan Stanley’s own thresholds for excessive turnover and cost-to-equity ratios, which generated nearly 100 internal alerts;
- Morgan Stanley failed to take reasonable steps to review red flags;
- Morgan Stanley’s own review of Gunnip’s recommendations concluded that they were generating high costs and commissions and were costing clients money;
- Morgan Stanley failed to take sufficient action as to Gunnip’s trading in the accounts; and
- Gunnip’s actions caused over $900,000 in customer losses.
Financial Advisor Kevin Gunnip (CRD# 2701801) BARRED by FINRA – Texas
FINRA permanently barred Kevin Gunnip from the securities industry on September 18, 2019. Gunnip was a financial advisor and registered representative with Morgan Stanley since 1996.
FINRA indicated that Gunnip refused to cooperate with on-the-record testimony in its investigation regarding allegations of unsuitable short-term trades of long-term corporate bonds and preferred stocks while employed at Morgan Stanley in Southlake, Texas.
Gunnip has also been the subject of three customer complaints alleging, among other things, unsuitable and excessive trading.
Morgan Stanley must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to supervise account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to adequately supervise their financial advisors or the investment account activity, they may be liable for investment losses sustained by customers. Investors harmed by Gunnip’s actions may have a claim against Morgan Stanley.
A FINRA restitution order does not preclude investors from pursuing their own claims to seek restitution or other available remedies.
If you have lost money with former Morgan Stanley broker Kevin Gunnip, contact Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.