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Morgan Stanley Case to be Settled through Arbitration

Monday, March, 28, 2016

A FINRA arbitration seems to be the future for Morgan Stanley regarding the firm’s Cushing MLP High Income Exchange Traded Note. The claim was filed by the White Law Group and was submitted to FINRA on behalf of investors in North Carolina. The two claim there was a violation of common law, negligence, breach of fiduciary duty, and negligent supervision.


The claim also alleges Morgan Stanley unsuitably invested in Morgan Stanley Cushing MLP High Income ETN investments and that the firm claimed to disclose the risks associated with those investments. Brokers are required to disclose any risk involved with an investment and to perform due diligence on that investment to determine if it is suitable for the investor, based on net worth, age, investment experience, income, and objective for investing.


Morgan Stanley’s managing partner D. Daxton White was asked about the FINRA claim and stated is concerned the firm could have improperly recommended the risky investment to many investors. He further explained the firm is looking for ways to help investors gain income, especially in the current low-yield environment, but there was enormous risk with this investment.


The FINRA dispute resolution process using arbitration allows investors to file claims against firms and financial professionals. Investors are also provided with an opportunity to recoup their losses without heading to court. Arbitration reduces the expenses, time, and other resources associated with settling a claim in court. The goal is to prevent mishandling of funds, and to provide a convenient alternative to solving problems when they do occur.