There’s a troublesome trend that I’ve seen time and again in the finance world: deceit and theft. Darryl Cohen, once part of Morgan Stanley’s team, now stands accused of numerous violations by FINRA and is charged with siphoning funds from several NBA players’ accounts. The plot thickens.
Who is Darryl Cohen?
Searching for Darryl Cohen online brings up red flags and stern warnings — the signs of a man mired in scandal. His career is a rollercoaster of disputes with clients, troubles with regulators, action by the SEC, and eventual expulsion from Morgan Stanley. His cautionary tale emphasizes the need for investors to be incredibly careful when picking a broker.
Breaking the Barrier of Trust
The U.S. Securities & Exchange Commission (SEC) came down hard on him in March 2023. They claim Cohen took advantage of his position to cheat three former NBA athletes, allegedly pilfering at least $1 million from their fortunes. The case calls for Cohen to return the ill-gotten gains and pay additional penalties. Think about it — these athletes trusted Cohen with their riches, and they were reportedly robbed.
FINRA acts as a watchdog for stockbrokers and brokerage companies, mandating them to report all customer complaints. In February 2022, they permanently banned Cohen from working in the securities industry for dodging requests that pertain to rule 8210, which were about suspected misuse of customer funds.
Embroiled in Customer Disputes
In 2021, a number of unhappy Morgan Stanley Smith Barney customers brought claims against Cohen. They stated he had pushed them to take out loans against their assets — such as real estate and life insurance — for ventures they had never shown interest in. What followed were allegations of unauthorized transactions and ill-advised outside business suggestions – with dire repercussions for the clients. The settlements resulting from the FINRA cases racked up:
- FINRA case#21-02498 – Settled for $1,575,000
- FINRA case #21-01033 – Settled for $32,000
- FINRA case #21-00822 – Settled for $1,700,000
- FINRA case #21-00110 – Settled for $2,500,000
- FINRA case #20-1648 – Settled for $125,000
- NASD case 01-5581 – awarded $81,851 to the client
This sequence of settlements sketches the portrait of a man who potentially betrayed his clients’ trust and meddled with their finances. It’s only an accusation at this point, though.
Morgan Stanley Smith Barney cut ties with Cohen in March 2021, citing his role in unreported client activities and transactions. His story is a clear signal that in our field, trust, openness, and compliance with protocol are fundamental.
Investors who’ve taken a hit from Darryl Cohen’s actions might have a right to recover their losses through FINRA arbitration. It’s important to monitor your broker’s behavior and, if something seems off, get legal counsel right away.
As a financial analyst, I consider it my responsibility to remind you to always practice due diligence. “An investment in knowledge pays the best interest,” Benjamin Franklin once said, and understanding how to verify an advisor’s history is part of that investment. To that end, checking an advisor’s FINRA BrokerCheck report, including their CRD number, is a wise move every investor should make.
For example, it is a disturbing fact that some financial advisors with bad track records continue to find work in the industry. Research shows that over 7% of advisors have been disciplined for misconduct, yet remain working with clients who might be unaware of their advisor’s tainted history.
In closing, the financial world can be a minefield, and it is stories like Darryl Cohen’s that highlight the importance of staying informed and alert. For those partaking in the investment journey, it’s not just about choosing the right investment; it’s equally about choosing the right advisor. Remember to be vigilant and always, always do your homework.
