Securities Fraud Lawyers Blog
Bad Week for Big Banks
Some of the nation’s top banks are facing another bad week, legally and financially as they are subjected to increased scrutiny and demand for reparations from federal regulators.
Wells Fargo faces a continued inquest into the extent of its accounts fraud scandal as regional and municipal governments, including Hillsborough County, look further into their interests with the banking giant.
A top financial regulator in Massachusetts is now charging Morgan Stanley with unethical conduct following a claim of a sales contest among Morgan Stanley brokers pushing securities-backed loans onto clients.
Additionally, German banking giant Deutsche Bank is facing slipping stocks and credibility as it struggles to reach a conclusion with U.S. courts over an up to $14 billion fine for mis-selling mortgage-backed securities, according to a report from Reuters. The report states that Deutsche Bank’s U.S. stock-holdings fell about 2.8 percent.
Déja Vu with Morgan Stanley?
Though Morgan Stanley vehemently denies the charges put forth by William Galvin, Secretary of the Commonwealth, that the company is guilty of unethical conduct, it does not deny the existence of the sales contest.
The contest involved cross-selling banking products, mostly securties-based loans, to Morgan Stanley’s brokerage clients. Glavin’s claim asserts that this cultivated a “high pressure” environment to meet contest goals that was against Morgan Stanley’s corporate policy.
Morgan Stanley did suspend the contest after the contest was discovered to be inconsistent with corporate policies, but maintain that no accounts were opened without customer understanding and consent.
Tensions Running High
Public opinion and federal regulators are taking a vigorous and critical look at big banking tactics following the Wells Fargo scandal. With the aftermath of the 2008 financial crisis still looming in the economy’s rear-view, regulators and banking customers raise concerns over fundamental flaws in ethical banking procedures and continue to examine banks’ financial interests.