A Finra panel awarded a Morgan Stanley client $1.8 million after she requested arbitration to settle a dispute over whether the firm had provided enough supervision to one of her brokers—who was also her nephew.
According to the award letter filed Monday, Karen Busch filed a statement of claim on Jan. 26, 2021 alleging breach of fiduciary duties, negligence and/or gross negligence, breach of contract, suitability and failure to supervise, among other charges.
The charges stemmed from an investment in WisdomTree Investments, an ETF sponsor and asset manager that went public in 1991. Busch’s Morgan Stanley brokers were David P. Wachsman and Todd Wachsman, her brother-in-law and nephew, according to reports, but Morgan Stanley was the only named respondent in the arbitration.
One of Busch’s attorneys, Matthew Plant of New York’s Lax & Neville, said his client was thankful to the three-member Finra panel for its decision. She moved her assets from Morgan Stanley in the summer of 2020 because of the dispute.
“It was the overconcentration in WisdomTree recommended by Todd that made the investment unsuitable,” Plant said. “In a smaller amount, it would not have been unsuitable.”
According to BrokerCheck, Busch’s dispute was the only disclosure in David P. Wachsman’s 31-year brokerage career, which took him from Lehman Brothers to Citigroup Global Markets to Morgan Stanley. He died in July.
Todd E. Wachsman remains dually registered at Morgan Stanley, according to BrokerCheck, where he has been since 2009. Prior he also worked at Citigroup Global Markets, and like his father this dispute was the only disclosure in his career.
Despite neither broker being named in the arbitration, the Finra panel declined to grant Morgan Stanley’s request that their registration records be expunged of all references to the dispute.