Morgan Stanley pays $7.2M for duping retirees

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Morgan Stanley pays $7.2M for duping retirees

Brokers convinced dozens of workers at Eastman Kodak and Xerox to retire early and open accounts where they lost their savings.

NEW YORK (Reuters) -- Morgan Stanley will pay more than $7.2 million to settle regulatory charges its brokers induced dozens of workers at Eastman Kodak Co. and Xerox Corp. to retire early and open accounts that cost them much of their wealth.

The Financial Industry Regulatory Authority said the penalty includes a $3 million fine and more than $4.2 million of restitution.

The regulator also permanently barred former Morgan Stanley (MS, Fortune 500) broker Michael Kazacos from the securities industry, charged another former broker David Isabella with misconduct, and suspended their manager Ira Miller from acting as a principal for one year. Miller was also fined $50,000. All three worked in a Morgan Stanley branch office in Rochester, New York.

FINRA accused the brokers of promising Kodak (EK, Fortune 500) and Xerox (XRX, Fortune 500) employees they could earn returns of 10% or more each year, and that they could withdraw money for living expenses without reducing principal.

http://money.cnn.com/2009/03/25/retirement/retirees_fine.reut/index.htm?postversion=2009032512