In the summer of 2023, a 75-year-old widow named Marjorie Kessler was defrauded of nearly $2.1 million by a complex scam involving impersonation by multiple criminals. After a FINRA arbitration, Morgan Stanley was found liable for negligence, failing to prevent Kessler from making unusually large withdrawals that depleted about one-third of her assets. Although the firm asserted that Kessler is competent and had misrepresented her intentions, the arbitration panel ordered them to pay her $843,000, highlighting broker responsibilities in protecting clients from fraud.
In its negligence ruling, the arbitration panel held that Morgan Stanley failed to recognize the unusual nature of large withdrawals from Kessler's accounts.
Kessler was deceived by scammers posing as technical support and bank employees, convincing her that she was a victim of identity theft.
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