SEC Implicates Ex-Morgan Stanley Broker for Soliciting Securities After Ban

A former Morgan Stanley broker who was banned from the securities industry went on to solicit $2.7 million from a number of retired investors without disclosing that his licence was revoked, according to a Reuters report.

The US Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) said that Rafael Calleja informed investors that their principal was insured and they would receive a fixed rate of return in one year.

Personal Enjoyment

Calleja allegedly used around $123,000 of the investors' money for golf outings, cruises and other personal enjoyment.

In 2012, Calleja, who was a broker for Morgan Stanley in Tampa, Florida from 2008-2011, was permanently banned from the securities industry for his misconduct at prior firms, according to a settlement with the Financial Industry Regulatory Authority (FINRA).

Misconduct

The misconduct included using an ATM card to make over $67,000 in withdrawals from a customer's securities account between 2005 and 2007 while a broker for Bank of America Corp's Merrill Lynch unit, making trades without the customer's permission and recommending a risky investment strategy.

In 2014, Calleja part-owned and managed Miami-based Tower Trade Group through which he sold privately issued securities which were not SEC registered. Calleja, however, was not allowed to sell privately issued securities which are SEC regulated, because of his disciplinary history.

According to SEC, Calleja failed to disclose virtually any information to the investors, including that the funds would be sent offshore to be invested by a foreign company affiliated with his firm.

Calleja started investing the funds in November 2014, around eight months after the initial investor deposit, but did not invest the bulk of the funds until the end of January 2015, almost a year after the initial investor deposit.

After discovering that Calleja misused the investors' funds, Tower Trade re-paid everyone in full, as well as covering the shortfall caused by Calleja's misappropriation.

Calleja will defend against the SEC's allegation in a forthcoming court proceeding.