Family sues Morgan Stanley Smith Barney
Morgan Stanley Smith Barney is being sued by a Victorian family who allege they lost $400,000 due to flawed investment advice.
The family was allegedly advised by Tony Emerton of Citigroup Wealth Advisers to take out a margin loan of $160,000 and invest it, along with approximately $240,000 the family had borrowed to build their home, in the stock market, according to the family’s lawyer, Briohny Coglin of Maurice Blackburn lawyers.
Citigroup Wealth Advisers came under the control of Morgan Stanley Smith Barney in 2009.
“Mr Emerton recommended the couple use gearing and call options, and when the couple told him they didn’t know about such things, Mr Emerton said he’d explain it when he was in Melbourne. This meeting and the explanation never took place,” Coglin said.
Maurice Blackburn is alleging Citigroup Wealth Advisers breached its duty of care and the Corporations Act.
“Between March 2007 and mid-2009, Ms Morton regularly received calls from Mr Emerton seeking instructions to buy or sell shares. On each occasion, the couple followed Mr Emerton’s advice. The strategy was meant to use the profits from the shares to pay back the loans, but the shares went down and Ms Morton was left with a huge debt that she couldn't repay,” Coglin said.
Morgan Stanley Smith Barney noted that the substance of the matter occurred before Morgan Stanley took control of the firm in June 2009, and it was operating as Citigroup Wealth advisors.
“The allegations raised are denied by the firm and we are defending this matter,” a spokesperson for Morgan Stanley Smith Barney said.
The matter is set down for trial on 16 November, 2011.
Recommended for you
ASIC has issued infringement notices to two AFSLs over financial advisers providing personal advice while they were unregistered.
Australian retirees could increase their projected annual incomes by as much as 51 per cent through comprehensive financial advice, according to a Vanguard study, but cost continues to be an issue.
AMP has announced a senior appointment to its North leadership team, reinforcing the firm’s commitment to the advice industry.
Despite the financial adviser exam being rooted in ethics, two professional year advisers believe the lack of support and transparency from the regulator around the exam is unethical.
