As someone who analyzes and writes about finance, I view instances of fraud and exploitation in the financial sector with gravity. It’s unfortunate to witness scenarios in which experts, tasked with managing the savings of consumers—especially those of the elderly—fail to uphold that trust. A recent case has come to my notice.
I’m talking about the case of Morgan Stanley and a former financial advisor, Francisco Valenzuela. They were ordered by a FINRA arbitration panel to pay $330,000 related to claims of fraud and elder abuse.
The allegations, posed by Carlos Ramon Tapia Sanchez in October 2020, encompass supervision lapses, misappropriation, deceit, and exploitation of an older investor, among other issues. These allegations centered around “various unspecified securities,” according to the award document made public by FINRA.
In this fray, not only Morgan Stanley and Valenzuela were implicated, but Merrill Lynch found itself in the crosshairs too.
Though the claim sought damages exceeding $350,000, this figure included not just compensation for the alleged wrongs but also the legal costs incurred.
Merrill Lynch sidestepped further legal action through a voluntary dismissal notice against them in March 2020, leading the FINRA arbitrators to dismiss any relief requests against the firm.
If you believe you’re a victim of investment deception at the hands of Francisco Valenzuela, I urge you not to stay silent. Haselkorn & Thibaut, P.A. can provide a free private consultation at 1-888-614-9356.
A Brief Recap of Francisco Javier Valenzuela’s Career
I dived into Francisco Valenzuela’s history in finance and found a trail spanning multiple firms since 1996. His BrokerCheck record implies a career that took him from Merrill Lynch in 2010 to his last stop at Morgan Stanley in 2018.
Despite being barred by FINRA in 2018 for not appealing a suspension in time, this decision was later overturned. However, Valenzuela faced suspension again in December 2019, this time for eight months due to a failure to disclose essential information.
Since his departure from Morgan Stanley in 2018, Valenzuela seemingly hasn’t affiliated himself with another firm.
Diving into the Arbitration Decision
Morgan Stanley and Merrill Lynch, in a predictable trajectory, rebuffed the claims and sought to have them dismissed, including arbitral costs and attorneys’ fees, according to the FINRA disclosure.
Valenzuela, for his part, neglected to file an official response or a signed submission agreement.
The arbitration panel decreed Valenzuela to compensate $160,000 for his fraudulent actions, including manipulation and misrepresentation. Morgan Stanley, held accountable for oversight failures and negligence, was instructed to pay an identical sum.
Moreover, both parties were also deemed responsible for legal fees amounting to over $10,000.
In this complex financial landscape, where trust should be paramount, it’s unfortunate that we encounter such negligence and intentional deception. Reflecting on the insightful words of Warren Buffet, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Earning trust is crucial in our industry, and these actions by Valenzuela and the lack of appropriate supervision by Morgan Stanley have shattered the very foundation of this trust.
It’s important to highlight the financial fact that poor financial advisors can be devastatingly costly. According to a report by the Securities and Exchange Commission (SEC), bad financial advisors cost American investors billions of dollars each year due to misconduct.
To protect yourself, always verify an advisor’s credentials and disciplinary history through resources like their FINRA CRD number. Although no method is foolproof, staying vigilant is the best defense against falling prey to financial malpractices.
In conclusion, this case serves as a reminder of the persistent vigilance required in the financial sector to safeguard investors’ livelihoods, especially the vulnerable population. As an analyst devoted to consumer protection and financial integrity, I will continue to monitor and report on such cases, emphasizing the need for greater accountability in the industry.
