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Former Broker Blames Morgan Stanley Research For Losses
Tuesday November 5, 4:23 pm ET
By Lynn Cowan, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- A one-time rookie broker has filed an arbitration claim against his former employer, alleging that his reliance on Morgan Stanley's overly enthusiastic stock research caused his personal portfolio to plummet by $250,000.
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John Tripi, a New York City resident who worked at Morgan Stanley for less than two years before his termination in December 2000, claims in an arbitration filed with the New York Stock Exchange that he bought and held on to more than 3,000 shares of Copper Mountain Networks Inc. (NasdaqNM:CMTN - News) based on the enthusiastic research of Morgan Stanley analyst Alkesh Shah. The claim was first reported Tuesday by Bloomberg.
Tripi purchased the majority of his shares in the Palo Alto, Calif., telecom firm in the summer of 2000, near the height of the market. When the stock became volatile, he wanted to hedge his position by buying put options, but was told by his supervisor that brokers with less than two years of experience couldn't trade options. He considered selling his shares, but decided against it based on his nearly weekly conversations with Shah, who kept reassuring Tripi to " hold tight" and issued research reports on the stock with titles like, "Copper Mountain Still Shines Like Gold" and "The Pot of Gold At The End of The Rainbow."
Shah downgraded his "outperform" rating to "neutral" on Copper Mountain in October 2000, after the shares had fallen 80% from the beginning of the year.
Shah's office referred all calls to a Morgan Stanley spokesman, Bret Gallaway, who called Tripi's claim "preposterous."
"John Tripi was a licensed broker who was well-trained in the principles of diversification. He chose to ignore his training when he speculated on his own account. He has no one to blame but himself for his financial position today," said Gallaway in a prepared statement.
Tripi, 30, worked in his family's printing business before he signed up for a Morgan Stanley broker training program in 1998. He was terminated when he didn't meet his production quota; he is now a part-time bartender.
Tripi's attorney, Howard Meyers of Meyers & Heim in New York, said his client was taught throughout his training to focus on selling to clients, and to rely exclusively on Morgan Stanley's research for investment ideas.
"He did was he was supposed to do: Leave the research to the analysts, stay out of it," said Meyers. "He's quite frankly disillusioned by the brokerage industry."
-By Lynn Cowan, Dow Jones Newswires; 202-628-9783; lynn.cowan@dowjones.com |
