Morgan Stanley

Bennett Robert Zamani of Paramus, New Jersey, a stockbroker formerly registered with Morgan Stanley, has been fined $27,500.00 and suspended for 14 months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Zamani engaged in outside business activities and had provided prospective investors with unbalanced and unfair communications concerning investments. Letter of Acceptance, Waiver, and Consent No. 2020066847301 (May 16, 2022).

According to the AWC, from January 2017 to April 2020, when Zamani was employed by Morgan Stanley, he owned and controlled a company that provided investment content to investors on a subscription basis. FINRA states that Zamani’s website showed that the company was targeting day traders who wanted to learn from stock traders to be profitable. Zamani’s communications were made through newsletters, his website, and through a YouTube channel. The regulator states that Zamani earned $360,000.00 through this company.

FINRA states that Zamani was prohibited under Morgan Stanley’s supervisory procedures from engaging in outside activities unless the firm provided him with written authorization. Since Zamani’s involvement in the outside company was not part of his activities with Morgan Stanley, Zamani was required to disclose this company. Zamani failed to report this company and, on three occasions, submitted false responses in annual compliance questionnaires regarding his activities. Zamani violated FINRA Rules 2010 and 3270 for this reason.

FINRA also states that Zamani violated FINRA’s content standards. The regulator found that from August 2016 to April 2020, Zamani produced hundreds of communications relating to his outside business activity.

The regulator points to Zamani’s communications, which included him offering investment opinions to prospective investors without getting Morgan Stanley’s approval, and Zamani’s submissions of compliance questionnaires reflecting that he did not provide investment opinions through an online platform, such as a blog.

FINRA states that Zamani used unfair and unbalanced communications, leaving the prospective investors without the ability to properly evaluate the investments. The regulator notes that in one case, Zamani used terms including “puts” and “bear flag” without telling investors what those terms meant.

Zamani also made unwarranted and unbalanced statements to individuals through his outside business activity. FINRA notes that in a January 2017 communication (some including customers of Morgan Stanley), investors were told about how following his simple steps could allow them to make their first million dollars.

FINRA also points to Zamani’s projections of investment performance, including a YouTube video from December 2019, where Zamani compared stocks in separate industries to suggest that the price of an energy company’s stock would rise to $80 per share.

FINRA also states that Zamani’s retail communications included his investment recommendations, mandating the use of certain disclosures relating to his recommendations. In one of Zamani’s communications, he did not disclose that he had a financial interest in the securities he recommended. The stockbroker also sent customers newsletters concerning recommendations for ETFs. Zamani did not disclose that he owned shares in the ETFs. In some cases, he failed to tell investors about the reason for his recommendations.

The AWC finally states that Zamani did not include disclosures relating to ETF performance. He provided price charts and performance information that omitted average total returns for the ETFs over a one-year, five-year, and ten-year period. In those communications, there was no offer to provide the prospective investor with a performance legend or a prospectus. The regulator also notes that Zamani failed to include information about annual fund operating expenses, gross expense reimbursements, and fee waivers.

Zamani violated FINRA Rules 2010 and 2210(b), 2210(d), and 2210(g). He also caused Morgan Stanley’s books to be inaccurate, violating FINRA Rules 2010 and 4511.

Zamani was discharged by Morgan Stanley Wealth Management on April 30, 2020, founded on accusations of his outside business activities and unauthorized trading.