Erez Law has recently filed a FINRA arbitration against Morgan Stanley, alleging between $500,000 and $1 million in damages.
The customer alleges investment losses due to recommendations by Morgan Stanley broker Sean Righter (CRD #5419832). He has been a registered representative of Morgan Stanley in Irvine, California, since 2009.
The Erez Law client alleges the following in the newly filed FINRA claim:
The client alleges that the broker implemented a reckless and unsuitable strategy of dangerously over-concentrating the clients’ retirement savings in ARK investments. It is alleged that he recommended the client invest through Morgan Stanley’s Select UMA (unified managed account) Program, which allows Morgan Stanley clients to invest the assets in one account in various investment products, including separately managed accounts (SMAs), which are professionally managed portfolios by third party managers that involve a specific strategy or style for a fee.
Erez Law alleges that he recommended that the client invest in SMAs managed by ARK Investment Management – ARK Disruptive Innovative Strategy and ARK Genomic Revolution Strategy – an investment management firm founded by Cathie Wood. It is alleged that the broker concentrated 45% of the client’s retirement accounts in the two ARK strategies. By drastically concentrating the client’s irreplaceable retirement savings in ARK Strategies, he significantly increased the level of risk to which they were unknowingly exposed.
According to the claim, he did not seek the client’s prior authorization prior to changing their allocation to the two ARK SMAs in the IRA accounts. It is alleged that the ARK SMAs were speculative in that they held significant stakes in speculative and unproven or unprofitable companies such as Teladoc Health, Robinhood, Coinbase, Draftkings, and Exact Sciences.
It is alleged that he also allocated the client’s retirement accounts to invest in Invesco Wilderhill Clean Energy ETF, a high-risk and unsuitable ETF that invests in companies focused on clean energy and conservation. The Invesco Wilderhill Clean Energy ETF invests heavily in micro-cap and small-cap companies in an emerging segment of the economy, which causes the Invesco Wilderhill Clean Energy ETF to be a very volatile investment.
Regrettably for the Erez Law client, the ARK SMAs and the Invesco Wilderhill Clean Energy ETF in the client’s retirement accounts sustained massive losses in 2021 and 2022. The client noticed the rapid decline of their accounts and contacted the broker to raise their concerns on several occasions. The client requested that the broker make changes to the accounts to limit further losses. The broker allegedly repeatedly downplayed their concerns and insisted on maintaining his strategy.
Two speculative and unsuitable ARK strategies that he recommended suffered significant losses. The Genomic Revolution Strategy suffered 33.6% losses in 2021 and 54.12% losses in 2022. The Disruptive Innovation Strategy suffered 20.37% losses in 2021 and 68.48% losses in 2022. Invesco Wilderhill Clean Energy ETF lost approximately 54% between November 2020 to October 2022.
In October 2022, Sean Righter called the client and in a complete reversal of his prior recommendations and representations, recommended that the client liquidate their ARK investments and invest the proceeds in primarily fixed-income investments. The broker terminated the ARK SMAs and the Invesco Wilderhill Clean Energy ETF in the client’s accounts. In so doing, the client sustained staggering losses in 2022. His recommendation to terminate the ARK SMAs and the Invesco Wilderhill Clean Energy ETF is nothing short of a complete admission that these investments were never suitable for the client.
Erez Law alleges that the broker’s strategy to almost entirely exit equities in October 2022 for the client’s retirement accounts also prevented them from participating in the market recovery of 2023. This unsuitable strategy further compounded the totally avoidable damage he inflicted on the client.
Stocks Losses in ARK SMAs and Invesco Wilderhill Clean Energy ETF:
It is alleged that Sean Righter recommended the client invest in the following stocks in ARK SMAs and Invesco Wilderhill Clean Energy ETF:
- Coinbase Global
- Crispr Therapeutics
- Exact Sciences
- Fate Therapeutics
- Invesco Wilderhill Clean Energy ETF
- Invitae
- Pacific Biosciences
- Roku
- Square/Block
- Teladoc Health
- Twilio
- Uipath
Between October 2020 to October 2022, the client lost a significant portion of their investment in their two retirement accounts. The overwhelming majority of the losses were due to the allocation to the two ARK SMAs and Invesco Wilderhill Clean Energy ETF. During the same period of time, the S&P 500 had a positive return and had the client retirement savings been invested in the S&P 500, they would have experienced a difference in return of more than $700,000. It is alleged that the broker’s unsuitable strategy exposed them to more risk and lesser returns than the market.
It is alleged that he recommended the clients invest in three ARK ETFs that sustained losses, including:
- ARK Next Generation Internet
- ARK Fintech Innovation
- ARK Genomic Revolution
This is not an isolated case. It is alleged that he has engaged in the same wrongful and damaging conduct in connection with other Morgan Stanley customers.
Sean Righter Customer Complaints
In addition to the case above, he recently has been the subject of one additional customer complaint, according to his CRD report:
March 2023. “Claimants allege, inter alia, unsuitability with respect to investments in accounts – 2020 – 2023.” The case is currently pending.
Erez Law previously filed a FINRA arbitration against Morgan Stanley related to allegations that Sean Righter implemented an aggressive, reckless, and unsuitable strategy that was not in the Erez Law client’s best interest.
How to File a Claim Against Sean Righter
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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