Morgan Stanley, along with one of its financial advisors, now former, Francisco Valenzuela, have been asked to pay $330K over several violations, including allegations of fraud, by an arbitration panel of the Financial Industry Regulatory Authority (FINRA).
The claim was filed by Carlos Ramon Tapia Sanchez in October 2020. Allegations included supervisory failure, conversion, fraud, and elder abuse, among several others. The claim is related “to various unspecified securities,” as per the award document published by FINRA. In addition to Morgan Stanley and Valenzuela, Merrill Lynch was also named as a defendant.
A total sum of $357,622 was sought, which included lawyers’ fees, apart from compensatory damages.
Sanchez, in March 2020, filed a voluntary dismissal of claims notice against Merrill, with prejudice. As per the award document, the arbitrators made no determination against Merrill Lynch for relief requests against them.
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Record of Francisco Javier Valenzuela
Starting in the financial services industry in 1996, Valenzuela moved through six different firms before he joined Merrill Lynch in 2010. From there he moved to Morgan Stanley with whom he stayed till 2018, as per his BrokerCheck record.
Though Valenzuela had been barred by FINRA in July 2018, with effect from October 2018, for his failure, in a timely manner, to request for the termination of suspension, the bar was vacated by FINRA in November 2018.
Valenzuela was suspended by FINRA for 8 months in December 2019, effective January 2020. This was for his failure to disclose a material fact on the U4 Form.
After leaving Morgan Stanley in 2018, Valenzuela has not registered with any other firm.
The verdict
Both Morgan Stanley and Merrill Lynch denied any wrongdoing and sought a dismissal of the claim, including that of arbitration costs and lawyers’ fees, as revealed by FINRA
Valenzuela, it appears, failed to file an answer statement as well as a properly executed agreement of submission.
He was asked to pay $160,000 towards compensatory damages for fraud, manipulation, and misrepresentation, as per the award document. Morgan Stanley was asked to pay a matching amount to the claimant on account of supervisory failure and negligence.
Additionally, Morgan Stanley and Valenzuela were also asked to pay lawyers’ fees of over $10,000.
