Erez Law is investigating investment losses by Morgan Stanley and Broker Sean Righter. Erez Law recently filed a FINRA arbitration against Morgan Stanley.
In February 2025, Erez Law filed a customer complaint on behalf of a couple who suffered investment losses due to recommendations by Morgan Stanley broker Sean Righter (CRD #5419832). The claim involves highly speculative and unsuitable investments and strategies.
What is alleged of Broker Sean Righter and Morgan Stanley?
The couple were long-time customers of Morgan Stanley and Sean Righter. The couple entrusted Sean Righter and Morgan Stanley with their retirement savings they accrued at their former employers which they rolled over to their respective IRAs and their life savings. The couple trusted that their broker would manage their retirement savings and other savings in a prudent manner without exposing their savings to undue risk.
The couple deferred to their broker and did not initiate any investment in any particular security. All of the investments at issue were made based on his recommendations or unilateral investment decisions. Instead of following his client’s investment objectives, it is alleged that he implemented aggressive, reckless, and unsuitable strategies that were not in the clients’ best interests. His clients entrusted him to manage their retirement savings and other savings in a prudent manner without exposing their savings to undue risk.
According to the claim filed by Erez Law, Sean Righter and Morgan Stanley recommended clients gamble on highly speculative and unsuitable investments and strategies, resulting in very significant and completely avoidable losses.
ARK is an investment management firm founded by Cathie Wood. Sean Righter recommended clients invest through Morgan Stanley’s Select UMA (unified managed account) Program. The Select UMA Program allows Morgan Stanley clients to invest the assets in one account in various investment products including SMAs, which are professionally managed portfolios by third-party managers that involve a specific strategy or style for a fee.
Erez Law alleges that Sean Righter recklessly concentrated the clients’ accounts in two SMAs managed by ARK—25-30% in ARK Disruptive Innovative Strategy and 20-30% in ARK Genomic Revolution Strategy. These are reckless and unsuitable concentrations on their own .The ARK SMAs were speculative in that they held significant stakes in speculative and unproven or unprofitable companies. By drastically concentrating the couple’s irreplaceable retirement savings in ARK Strategies, he significantly increased the level of risk to which they were unknowingly exposed. In fact, the couple suffered losses of 33.60% in 2021 and 54.12% in 2022 in Genomic Revolution Strategy and 20.37% in 2021 and 68.48% in 2022 in Disruptive Innovation Strategy.
Making matters even worse, the couple sold their home and told their broker they were going to use the proceeds to buy a new home for cash or with minimal financing. Sean Righter recommended that they take a mortgage to buy their home, invest the funds with him, and represented to him that he will invest the funds and achieve a higher rate of return than the mortgage interest rate. He further represented to them that he will use the return on the funds to pay their monthly mortgage payment. The couple followed his recommended investment strategy and invested an additional $700,000 with Morgan Stanley and Sean Righter. Regrettably, he allocated at least 45% of the UMA account to ARK strategies. His strategy failed as he was unable to make the mortgage payments from the investment returns. Not only did the clients lose capital, they were forced to pay interest on a mortgage from a Morgan Stanley related entity they would not have otherwise. It is alleged that he failed to adequately disclose the staggering level of risk to which the couple were exposed due to his ARK focused strategy.
It is also alleged that he allocated 9% of the couple’s Rollover IRA account in 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. The ARK SMAs and the Invesco Wilderhill Clean Energy ET in the clients’ accounts sustained significant losses in 2021 and 2022. Invesco Wilderhill Clean Energy ETF lost approximately 62% from January 2021 to June 2022.
It is alleged that he did not seek his clients’ prior authorization prior to changing allocation to the two ARK SMAs. If he failed to obtain written discretionary authority from his clients, then these changes in allocation are deemed to be unauthorized. It is alleged that Sean Righter implemented a dangerously over-concentrated strategy in speculative and unsuitable ARK strategies.
What Investment Strategy Was the Stockbroker Recommending?
By drastically concentrating his clients’ irreplaceable retirement savings in individual high-risk ARK strategies or the combined concentration in ARK Strategies, it is alleged that he significantly increased the level of risk to which they were unknowingly exposed. It is alleged that he failed to adequately disclose the staggering level of risk to which clients were exposed due to his ARK-focused strategy.
According to the claim filed by Erez Law, the couple noticed the rapid decline of their accounts and contacted him to raise their concerns on several occasions. He allegedly repeatedly assured the clients that the strategy he implemented was appropriate and would achieve significant gains and downplayed their concerns and insisted on maintaining his strategy. It is also alleged that he referred to and used shared Christian faith in an effort to retain loyalty and to subdue clients into following his recommendations. The ARK SMAs sustained massive losses in 2021 and 2022 in his clients’ accounts.
What Should Financial Advisors Do?
Firms and financial advisors such as Morgan Stanley and Sean Righter who charge an investment advisory fee on an ongoing basis (as opposed to transaction-based commissions) are deemed to be acting as investment advisers under the Investment Advisers of 1940, which creates a heightened legal duty known as a “fiduciary duty.” As a result, Morgan Stanley and its employees, including Sean Righter, are encumbered with certain explicit legal obligations. In addition, he was obligated at all times to act in the best interest of the clients, which he failed to do. According to the claim filed by Erez Law, he admitted the ARK SMAs were unsuitable. It is alleged that Sean Righter recommended unsuitable trading of speculative stocks often with no profits.
His unsuitable strategy allegedly exposed his clients to more risk and lesser returns than the market. Morgan Stanley must be held liable for Sean Righter’s egregious conduct and failure to supervise him. Not only did the clients’ suffer significant losses in the ARK SMAs, but they failed to participate in returns they would have achieved in suitable equity funds.
Morgan Stanley charged the clients advisory fees. Despite the significant fees charged to act as a fiduciary and in the client’s best interest, he and the firm blatantly failed to meet their legal obligations and deliver the level of service offered.
Sean Righter Registrations and Work History
Sean Righter was a registered representative of Morgan Stanley in Irvine, California, from 2009 to 2025. On January 15, 2025, Morgan Stanley fired Sean Righter for “Concerns with ending heightened supervision that had been imposed following previously reported customer complaints.”
He began his career serving two years between 2007 and 2009 at Citigroup Global Markets Inc. in Laguna Niguel, California.
How to File a Claim Against Broker Sean Righter and Morgan Stanley
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Stifel, Nicolaus & Company, Incorporated may be liable for investment or other losses suffered by Sean Righter’s customers.
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.
Erez Law continues to speak to customers of Sean Righter, who have similar complaints against the stockbroker for wrongdoing. We are continuing to take on new cases to help pursue the losses customers experienced because of his actions.