Morgan Stanley Gets State Rap for Aggressive Cold Calling Tactics

Matthew Smith

13 September 2007

Morgan Stanley has been charged by Massachusetts state regulators in the US for improperly accessing personal information for the purpose of cold calling to prospect new clients for its wealth management business. A fine and punishment for the firm and authorised representatives involved is still to be determined. The securities division of the Massachusetts Secretary for the Commonwealth found a Morgan Stanley financial advisor based in Boston accessed personal information by downloading resumes improperly from job website Carreerbuilder.com. According to the charges obtained by WealthBriefing, financial advisor Alen Fox made several hundred calls during a period spanning 17 months, downloading resumes containing sensitive, personal and financial information in order to solicit business. “The resumes were chock-full of valuable information, such as employment history – suggesting potential sources of 401k transfers – recent salary information and vital contact information such as cell phone telephone numbers, that might not otherwise be published,” the charges stated. The financial advisor used the words “chief”, “president”, “director” and “principal” to search for top wage earners with the knowledge of the assistant branch manager. “Managers encouraged FAs to employ over aggressive phone prospecting methods including cold-calling without adequately monitoring compliance,” according to the charges. Morgan Stanley spokesman Jim Wiggins said: “These charges involve an isolated instance in one office involving a single Financial Advisor.” The Morgan Stanley branch in question was the High Street branch based in Boston. The state’s investigation began in November 2006 when a resident complained after receiving a cold call from Mr Fox. The investigation focused on the period from August 2005 to December 2006. “By emphasising cold calling as method of generating business, Morgan Stanley had a heightened duty to ensure that its representatives were complying with DNC (Do Not Call) requirements,” the charge stated. Mr Wiggins said the firm has systems in place to prevent abuse and trains its personnel to abide by all regulations. “The firm fully cooperated in this investigation from its outset. In fact, we provided all requested documents in a timely manner, including several hundred thousand documents and emails, and made all relevant personnel available,” he said. The state regulator will demand that Morgan Stanley cease and desist from the activity as well as asking a hearing officer to decide on a fine, whether disciplinary action should be handed out to the representatives involved, and potentially seek compensation for affected individuals.