David John Strnad of Franklin Tennessee a stockbroker formerly registered with Morgan Stanley has been suspended for eighteen months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Strnad effected unauthorized sales and purchases of certificate of deposits in an account owned by a customer of Morgan Stanley. Letter of Acceptance Waiver and Consent No. 2016051569601 (May 30, 2019).
According to the AWC, in 2007, a customer of Morgan Stanley, KW, intended on placing assets solely in certificate of deposits through a laddering approach. The AWC stated that Strnad, who serviced the customer’s account, was instructed by the customer to effect new certificate of deposit purchases only upon the maturity of the customer’s existing certificate of deposits. The customer never authorized Strnad to effect the sale of certificate of deposits held by the customer before maturity or utilize the proceeds for the purchase of more certificate of deposits.
The AWC stated that Strnad failed to effect transactions within the guidelines imposed by KW. Particularly, certificate of deposits KW owned had been sold by Strnad prior to their maturities. The AWC stated that a loss was incurred by KW in almost all of the transactions in which those certificates of deposits were sold early. Apparently, a total of two hundred seventy three transactions were executed by Strnad in the accounts owned by KW. Of them, one hundred thirty-eight involved certificates of deposit being sold before they had matured; the rest were purchases. The AWC stated that KW incurred $100,572.00 in losses from Strnad’s transactions effected beyond the scope of the authorization provided by KW. The AWC stated that at least $4,268.73 in commissions had been generated by Strnad by way of his trading activities in KW’s account. FINRA found Strnad’s conduct to be violative of FINRA Rules 2010.
FINRA Public Disclosure reveals that Strnad has been identified in two customer initiated investment related disputes containing accusations of his misconduct during the time that he was associated with Morgan Stanley. In particular, on May 11, 2004, a customer initiated investment related arbitration claim concerning Strnad’s conduct was settled for $30,000.00 in damages based upon allegations that unauthorized over-the-counter equities trades were executed by Strnad in the customer’s account. National Association of Securities Dealers (NASD) Arbitration No. 03-00857 (May 11, 2004). Thereafter, a customer initiated investment related complaint involving Strnad’s activities was resolved for $89,646.40 in damages supported by accusations that the customer’s certificate of deposit holdings had been churned.
Strnad’s registration with Morgan Stanley has been terminated as of March 4, 2016. Between February 18, 2016 and July 10, 2018, Strnad was associated with Wells Fargo Clearing Services LLC.
