A former Morgan Stanley broker will pay $5,000 in fines after the Financial Industry Regulatory Authority found he bought and sold customers’ securities without their consent, a practice the firm didn’t allow at the time.
Constantinos Maniatis agreed this week to pay the fine and be suspended for 30 days while neither admitting nor denying FINRA’s findings that he violated Municipal Securities Rulemaking Board’s Rule G-17 on fair dealing and other rules. Maniatis will pay $1,000 for the MSRB violations, with the other $4,000 for violating FINRA rules.
Between May 4, 2018 and Feb, 27, 2019, while with Morgan Stanley, Maniatis exercised discretion in seven customer accounts despit Morgan Stanley no longer allowing discretionary trading. Several of those transactions involved municipal securities, FINRA found. In May 2019, Morgan Stanley fired Maniatis.
“Maniatis exercised discretion in seven customer accounts on 105 occasions,” FINRA said. “Thirteen of the transactions involved municipal securities. Although Morgan Stanley and the customers had previously authorized the exercise of discretion in the customer accounts at issue, at the time of the transactions at issue, Morgan Stanley did not permit the exercise of discretion in the accounts and no longer accepted the accounts as discretionary account.”
By exercising discretion in customer accounts after Morgan Stanley no longer allowed that, Maniatis violated MSRB Rule G-17, FINRA said.
Maniatis also violated NASD Rule 2510 which prohibits registered representatives from exercising discretion in a customer’s account unless the customer gave written authorization and the representative’s firm accepted the account as a discretionary account in writing, FINRA said. With that, Maniatis violated FINRA Rule 2010, FINRA’s ethicial conduct rule, which is similar to MSRB Rule G-17. Rule 2010 requires FINRA-registered persons to conduct themselves "with high standards of commercial honor" and "maintain just and equitable principles of trade."
Maniatis is no longer a broker and is registered as an investment adviser, according to BrokerCheck, FINRA’s public online database that provides information about brokers and brokerage firms.
Maniatis’ attorney did not respond immediately to a request for comment. Morgan Stanley declined to comment.
