The Financial Industry Regulatory Authority (FINRA) fined Morgan Stanley $2.4 million this week for defaming a former broker. Dale L. Cebert was a former Morgan Stanley registered representative who was terminated in 2014. According to the three-person arbitration panel, Morgan Stanley managers conducted a “flawed internal investigation that was conducted, acted upon, and reported with reckless disregard for its accuracy and completeness, and made defamatory statements to Cebert’s customers in at least a grossly negligent manner (if not with a self-serving malicious motive.)” Cebert was ordered to pay back $1.26 million on two promissory notes, while Morgan Stanley had to pay $2.38 million in damages and another $500,000 in punitive damages. Morgan Stanley allegedly hired Cebert in 2012 with the intention of firing him and keeping his clients. The firm terminated Cebert, citing that he made payments through an outside business.
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