Miami, Fla. (July 26, 2019) - A three-person
FINRA panel in Miami ordered Morgan Stanley Smith Barney LLC
(Morgan Stanley) to pay Puerto Rico bond investors $3 million in
sanctions for failure to produce documents related to the
termination of a broker. The investors' Statement of Claim,
filed July 2017, alleged Morgan Stanley breached fiduciary duties,
negligence, negligent supervision, fraud, breach of contract, and
violations of Sections 10(b) of the Exchange Act and 10-b5 of the
1934 Act and related Florida state securities law claims related to
the sale of Puerto Rico bond investments.
While the award in compensatory damages was relatively small
($261,420) compared to the claimant's request at the close of
the hearing ($2.739 million plus attorneys' fees of $515,624
and $10.95 million in punitive damages), the panel appears to have
made up for the relatively low compensatory award by issuing
sanctions for discovery abuse.
