BROKER WHO MISLED XEROX RETIREES BARED BY AUTHORITIES

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BROKER WHO MISLED XEROX RETIREES BARED BY AUTHORITIES

 user 2009-12-21 at 10:06:36 am Views: 235
  • #23272

    BROKER WHO MISLED XEROX RETIREES
    DISBARED BY AUTHORITIES

    NEW YORK- A
    second broker has agreed to Financial Industry Regulatory Authority
    disbarment in a case that cost Morgan Stanley  (MS) $7.2 million in
    fines and restitution for failing to adequately supervise registered
    representatives in its Rochester office.

    David Michael Isabella
    allegedly misled dozens of former Xerox Corp. (XRX) employees by
    promising them unrealistic and unsustainable returns, according to a
    settlement agreement between the former broker and Finra that was
    released on Monday.In March, Morgan Stanley agreed to pay $7.2 million
    in fines and restitution to 90 Rochester, N.Y.-area retirees to resolve
    charges that its supervisory system failed in regard to Isabella and
    another broker, Michael J. Kazacos, in its Rochester office. Morgan
    Stanley had previously settled with 101 other customers, and Kazacos
    previously had agreed to disbarment from the securities industry.

    On
    Monday, Finra released a disciplinary finding that said Isabella also
    had agreed to disbarment for his inappropriate solicitation and
    mishandling of IRA rollover/retirement accounts. Isabella did not admit
    or deny Finra’s findings but consented to them in an agreement signed on
    Sept. 1, 2009 and released on Monday.

    “Mr. Isabella was
    dismissed by Morgan Stanley and is no longer employed by the firm,” said
    Christine Pollak, a spokeswoman for the company. “The conduct at issue
    took place over five years ago. Morgan Stanley cooperated with the
    authorities and with affected clients to resolve their claims. We deeply
    value our relationship with our clients in the Rochester area and look
    forward to continuing to serve them in the future.”

    According to
    the Finra agreement, Isabella–a former Xerox employee–received
    confidential information about other Xerox employees from the company’s
    human resources and other departments in exchange for gifts that
    included phone cards, gifts and tickets to sporting events.The report
    also said that in his sales pitch, Isabella frequently provided
    prospective customers with a “Plan Summary,” promising rates of return
    of 10% or more. “Indeed, many of these summaries represented that the
    customers would be multi-millionaires at the end of a 35-year period,”
    said the report. Some of the clients decided to retire from Xerox based
    on those projected returns.

    Once clients agreed to open an
    account, Isabella typically used the same investments “without regard to
    individual needs or circumstances,” according to the report. Finra also
    found that Isabella “made unsuitable investment recommendations to the
    customers” and falsified client records at Morgan Stanley, which
    distorted their financial situation and goals. As a result, they did not
    receive the “benefit of getting a manager selected based on the their
    individual needs and financial situations.”Isabella was not available
    for comment. His attorney, Andrew W. Sidman of Bressler, Amery &
    Ross, said: “Dave Isabella at the time he left the industry had many
    satisfied and loyal customers. He is very pleased to put the issue
    behind him and to move on.”

    http://www.smartmoney.com/news/on/?story=ON-20091117-000355