A former Morgan Stanley advisor is on the hook for around $29,000 over the way he purchased securities in brokerage accounts and then moved them to fee-based accounts held by the same clients, according to Finra.
Between January 2014 and December 2016, John Borsellino allegedly recommended to eight clients that they buy municipal bonds and non-municipal securities in their brokerage accounts, causing them to incur upfront sales charges, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.
Borsellino then allegedly transferred the securities to the clients’ existing fee-based accounts, generally within 90 days of the purchase, Finra says. By buying the securities in the fee-based accounts in the first place, the clients would not have been hit with the upfront sales charges, according to the regulator. Those charges allegedly totaled around $58,000, earning Borsellino $23,931, Finra says.
Morgan Stanley has reimbursed the full $58,000 to the affected customers, according to the letter of acceptance.
Borsellino joined the financial services industry in 1990 and came to Morgan Stanley in 2009, Finra says. The wirehouse terminated Borsellino in January 2018 over “[c]oncerns about asset movements between, and the timing of trades in, accounts for the same clients with different fee characteristics,” according to his Form U5 termination notice cited by the regulator.
Borsellino consented to a three-month suspension, a $5,000 fine and disgorgement of the $23,931 he allegedly earned in commissions from the trades in question, plus interest, without admitting or denying Finra’s findings, the regulator says.
After his termination from Morgan Stanley, Borsellino did not register with another broker-dealer firm, according to his BrokerCheck profile.
Aside from his employment separation and suspension, Borsellino also has six customer disputes on his record, dating back to 2001, with one closed with no action, one denied and the rest settled, according to BrokerCheck.