BROKER WHO MISLED XEROX RETIREES BARED BY AUTHORITIES

[Anonymous]

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

[Author]

December 21, 2009 at 10:06 AM