Wednesday, August 20, 2014
Citigroup Inc’s Bnamex unit alleged that a unit of Morgan Stanley permitted funds from a family’s trust account to be used to repay third-party loans without its authorization. A Financial Industry Regulation Authority (FINRA) arbitration panel found Morgan Stanley liable for negligence and ordered the firm pays $4.5 million to Banamex.
The trust at issue was created in 2007 with proceeds from the sale of property that a group of adult siblings and their mother inherited. Banamex and the trust beneficiaries procured a broker at Morgan Stanley to manage their accounts the same year. The accounts were set up in such a way that prevented the assets from being used as guarantees to pay off third-party loans taken by another family member’s account.
See Suzanne Barlyn, Morgan Stanley Must Pay $4.5 Million to Banamex: Panel, Reuters, Aug. 18, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.