An aggrieved investor has filed an arbitration claim accusing Morgan Stanley was accused of accepting kickbacks from insurers seeking to promote a select group of variable annuities and investments, The Wall Street Journal reports.
Ron Marron, a lawyer representing an investor who filed the complaint, said his client purchased a pair of variable annuities from Hartford Financial Services Group without fully disclosing fees or taking necessary steps to establish suitability.
Morgan Stanley went ahead with the sales despite questionable circumstances because Hartford offered under-the-table financial incentives, Marron said. A spokesman from the firm called the claim baseless.
Shareholder advocates say the latest charge against Morgan Stanley follows a pattern of receiving undisclosed financial incentives from third-party financial investment providers. In 2003, Morgan Stanley paid $50 million in regulatory fines for charging outside mutual fund companies to join a preferred network of investment providers that received preferential treatment at the firm's sales branches.
The latest complaint against Morgan Stanley also addresses concerns over improper variable annuity sales tactics that paper over contract fees and portray insurance contracts as pure investments.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.