Morgan Stanley Smith Barney, LLC

Discharged

Concerns relating to representative's compliance with pre-trade client conformation requirement in connection with certain trades in non-discretionary accounts and representative's use of off-platform systems for written Firm business.

Client alleged that FA recommended an unsuitable options investment strategy. 2018 to 2021

$15,531,642.00

$4,100,000.00

Mr. McCaffrey and Morgan Stanley deny Claimant's allegations in the claim, and contend that all covered call option positions recommended to Claimant were suitable. Mr. McCaffrey and Morgan Stanley contend that the market conditions associated with the pandemic, including the volatility and the rapid appreciation of the underlying stock' position from 2020-2021 adversely affected the performance of Claimant's options. They further contend that Claimant was appropriately advised of the risks associated with the options strategy and chose to continue the strategy despite its losses. Morgan Stanley settled the claim to avoid the costs and uncertainty of litigation. Mr. McCaffrey was not asked to contribute to the settlement.

ALLEGES UNAUTHORIZED TRADES. ACTIVITY TOOK PLACE 12/99 TO 3/00.

$18,233.60