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Articles Posted in Options

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According to Morgan StanleyAccording to Morgan Stanley, the “Pelican Bay Group” is an elite team of 20 Morgan Stanley financial advisors and additional staff that manage wealth for high net worth families. As of December 31, 2021, the Pelican Bay Group reportedly manages approximately $4 billion in assets. However, the Group has come under scrutiny since a client recently filed a complaint against Managing Director Antony Gallea, claiming that Gallea had misrepresented the firm’s options trading strategy. Misrepresentations Violate FINRA Rules Under FINRA Rule 2020, brokers cannot use any manipulative, deceptive, or other fraudulent device or contrivance to induce the purchase or sale of any security. And if they violate that rule, FINRA can take a range of actions against the broker, including suspending the broker’s license and ordering the broker to compensate their clients. Morgan Stanley FINRA Arbitration Claims According to BrokerCheck, the recent allegations are not the first complaints FINRA has received about Gallea. While allegations are not proof of wrongdoing, if you’ve been investing with Gallea or the Pelican Bay Group, you may want to review your investments including any options strategies., the “Pelican Bay Group” is an elite team of 20 Morgan Stanley financial advisors and additional staff that manage wealth for high net worth families. As of December 31, 2021, the Pelican Bay Group reportedly manages approximately $4 billion in assets. However, the Group has come under scrutiny since a client recently filed a complaint against Managing Director Anthony Gallea, claiming that Gallea had misrepresented the firm’s options trading strategy. Continue reading ›

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In January 2022, FINRA, the organization that regulates and oversees Broker-Dealers and Wall Street brokers, received a securities arbitration claim regarding Anthony Gallea, a Managing Director and financial advisor at Morgan Stanley. In the complaint, a client alleged that Anthony Gallea misrepresented his options trading strategy, resulting in the client’s sustaining unspecified damages. And this is not the first time there have been complaints made against him by his customers. Silver Law Group represents investors in claims against financial advisors and others for breach of fiduciary duty, suitability and other claims. Our attorneys frequently assist investors in claims for misconduct relating to unsuitable options strategies, excessive fees and material misrepresentations. Stockbrokers Have A Duty Not To Misrepresent Or Mislead Investors FINRA’s Rule 2020 states: “No member shall effect any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.”In January 2022, FINRA, the organization that regulates and oversees Broker-Dealers and Wall Street brokers, received a securities arbitration claim regarding Anthony Gallea, a Managing Director and financial advisor at Morgan Stanley. In the complaint, a client alleged that Anthony Gallea misrepresented his options trading strategy, resulting in the client’s sustaining unspecified damages. And this is not the first time there have been complaints made against him by his customers. Continue reading ›

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As a Securities and Exchange Commission report found, options trading is highly technical and involves holding stocks for short periods of time. Given the complexity of these deals, customers frequently depend on their brokers to make almost all of their trading decisions. Unscrupulous brokers know this, and they use their customers’ reliance for churning—when a broker engages in excessive trading on customers’ behalf to generate more commissions. But churning is illegal, and brokers who have engaged in churning can be required to compensate their clients for related losses. Because customers rely so heavily upon brokers for options trades, brokers have additional requirements for making these trades. For example, they must know the customers’ financial position, their investment goals, and their age. And customers must understand the risks of options training. But it isn’t enough for them to understand that options trading is risky, generally speaking. The brokers should explain the risks of each specific deal. And they should weigh if their customers understand the trade and have the financial wherewithal to make it, before the trade.As a Securities and Exchange Commission report found, options trading is highly technical and involves holding stocks for short periods of time. Given the complexity of these deals, customers frequently depend on their brokers to make almost all of their trading decisions. Unscrupulous brokers know this, and they use their customers’ reliance for churning—when a broker engages in excessive trading on customers’ behalf to generate more commissions. But churning is illegal, and brokers who have engaged in churning can be required to compensate their clients for related losses. Continue reading ›

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While some view “covered call” trading as one of the forms of options trading that have the least risk, the reality is that covered call options still come with some serious risk. A covered call strategy also requires extensive trading and allows brokers to change commissions or other fees making these strategies very expensive. And it’s important to understand that if your broker has convinced you to follow a covered calls options strategy that resulted in investment losses, the broker may be liable to compensate you for those losses. Pros and Cons of a Covered Call Options Trade In a covered call options trade, Person A purchases stocks and then sells an option to sell the shares to Person B, once the shares have risen to a specified price. At that point, it’s up to Person B if they will purchase the shares or not. If the shares increase in value, Person A will profit from the increased value in the shares, whether they sell them to Person B or not. However, it’s possible that Person A would have done better if they’d held the stock for a longer investment, when the agreement will force them to sell at that price.While some view “covered call” trading as one of the forms of options trading that have the least risk, the reality is that covered call options still come with some serious risk. A covered call strategy also requires extensive trading and allows brokers to change commissions or other fees making these strategies very expensive. And it’s important to understand that if your broker has convinced you to follow a covered calls options strategy that resulted in investment losses, the broker may be liable to compensate you for those losses. Continue reading ›

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