On February 10th, a senior Morgan Stanley client in Florida who had previously been involved in a "gold bar" scam said she would receive $843000 in compensation from Morgan Stanley according to the ruling.

Marjorie Kessler, 76, stated in a lawsuit statement that she was scammed out of $1.75 million last year. Although the scammers were not the company but external fraudsters, she believes that Morgan Stanley did not implement additional protective measures and violated two industry rules and the "long-term" industry standards aimed at protecting senior customers.

The dispute was decided on Monday by a three person panel supported by the dispute resolution service of the Financial Industry Regulatory Authority (FINRA) in the United States.

This will become a new trend in the broker dealer industry and Wall Street, as more and more elderly people will suffer from such harm, "Kessler's lawyer Lloyd Schwed said in a media interview on Tuesday. B-D is the first line of defense

Morgan Stanley did not implement protective measures

The so-called "gold bar" scam refers to scammers impersonating federal agents and targeting victims through the internet or phone. The fraudster tells the victim that their account is no longer secure, then convinces them to purchase gold bars and hand them over.

According to the complaint, the online fraudster eventually entered Kessler's bank account, purchased gold bars worth over $1.6 million, and delivered them to her apartment in Florida. The fraudster told her to put the gold bars into a box and hand them over to a government courier. The courier would meet her outside the security gate of her apartment and deposit the gold bars into her custodial account in Washington, D.C.

The indictment states: "Despite clear warning signals of danger and financial fraud, Ms. Kessler's financial advisor authorized and assisted her in suddenly withdrawing $2.09 million from her credit line and liquidating assets from an insurance trust within nine days from July to August 2023.

The Financial Industry Regulatory Authority (FINRA) in the United States requires securities firms to establish additional protective measures for senior clients, such as setting up a trading cooling off period or a family notification mechanism. However, Morgan Stanley did not fully fulfill such obligations in this case, allowing fraudsters to exploit the information asymmetry and psychological weaknesses of elderly people to carry out fraud.

According to the arbitration award, Morgan Stanley wishes to reject this request.

We sympathize with Ms. Kessler for becoming a victim of third-party fraud, but we must remember that this fraud did not occur at Morgan Stanley, "a Morgan Stanley spokesperson wrote in an email. In addition, Morgan Stanley should not be held responsible for Ms. Kessler's losses as she falsely reported the purpose of the transfer to her financial advisor and authorized the transfer of funds to a third-party bank account opened in her name

Although the arbitrator of the Financial Industry Regulatory Authority did not provide an explanation for this ruling, Kessler's lawyer said he believed the reason was simple: "If Morgan Stanley had called my client's son, this kind of thing wouldn't have happened

epilogue

This lawsuit is not only an accountability for Morgan Stanley, but also a collective questioning of the wealth management industry: how to maintain the bottom line of customer trust while pursuing profit and scale expansion? For ordinary investors, this case is also a warning bell - behind the promise of high returns, there may be a carefully disguised trap. Only through the joint efforts of institutions, regulators, and investors can a true "anti fraud wall" be built for the financial market.