Morgan Stanley is facing at least one lawsuit connected to one of its former financial advisors accused of running a multi-year Ponzi scheme, according to news reports.

In April, the Securities and Exchange Commission filed a complaint against Shawn Good of Wilmington, North Carolina, accusing him of defrauding his clients at Morgan Stanley of at least $4.8 million in part by transferring funds to his personal bank account, resulting in more than $2 million of investor losses, as reported.

Good, who was registered at Morgan Stanley from December 2012 until March 10, 2022, allegedly used client funds toward payments for his Tesla, covering more than $800,000 in credit card bills and Venmo transfers with memo lines such as “‘because youre sexy’ (sic); ‘tattoo;’ ‘Hotel for Destiny;’ ‘Nailz;’ and ‘shopping,’’ the SEC said at the time.

Several law firms have contacted Good’s former clients and at least one of them, New York’s MDF Law, has now filed an arbitration complaint in South Carolina — this time against Morgan Stanley itself, the Triangle Business Journal writes.

The complaint involves an elderly investor who allegedly had $400,000 misappropriated from what she thought was a real estate investment, according to the publication, which cites a statement from MDF.

MDF Attorney Marc Fitapelli claims Morgan Stanley had multiple opportunities to prevent Good’s alleged violations as his emails — which the firm must monitor — raised “very significant red flags,” according to the Business Journal.

The complaint seeks the return of the allegedly misappropriated funds, plus interest, and lawyers’ fees, the publication writes.

Morgan Stanley was the one to report Good to authorities, said Lawrence Klayman, a partner at law firm KlaymanToskes, according to the Business Journal. Nonetheless, the wirehouse had “years” to identify the alleged fraud, he said, according to the publication.

KlaymanToskes has not yet filed an arbitration claim against Morgan Stanley but it has put out a statement looking for Good’s customers, the Business Journal writes. Other law firms could follow suit, according to the publication.

A spokeswoman for Morgan Stanley declined comment to the Business Journal.

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