Facing Multiple Lawsuits, Morgans Launches Secret Review of Rogue Traders

Morgans, one of the largest stockbroking outfits in Australia, has embarked on a secret examination to investigate the reparations for clients affected by the rogue trader actions from several years ago. According to sources, the examination goes as far back as January 2008 and does not include persons that have reached a settlement with Brisbane-based Morgans.

Additional pressure has been placed on Morgans, as the losses are implied to not be re-examined for settlements if signed prior to 2018 when problematic trading became public. The sources have also indicated complaints about poor trading practices have been made prior to 2008.

Morgans claimed to be Australia’s largest, national full-service stockbroking, and wealth management network, with more than 240,000 client accounts and “committed to ensuring all clients receive an exceptional professional service”. At this time, Morgans has declined to answer questions posed by The Australian Financial Review.

A retiree who has suffered losses before 2008, has argued older cases prior to the 2008 cut-off should be examined, as the problem may have existed for years. This issue did not just suddenly appear in 2008. He believes that re-examination should be made on any advice given by the advisor himself, and any or all settlements that were made with clients before the problem trading became publicly known.

Concerns from a former client are also due to the 2008 cut-off date: “How many investors will be excluded by this time limit being imposed? How will any inquiry know to what extent Morgans’ [problems occurred] if a time limit is imposed?”

Morgans have come to face dozens of Queensland lawsuits regarding their trading and advice from five branches.

An issue is raised towards the actions of Michael Taylor, a former adviser whose last stint was at Morgans’ Caloundra branch on the Sunshine Coast in Queensland.

Michael Taylor, a former adviser, has been the subject of issues at Morgan’s’ Caloundra branch on the Sunshine Coast of Queensland. Taylor has been permanently banned in 2018 by the ASIC for providing financial services during his time at Morgans and including options trading.

ASIC concluded Taylor had borrowed money from his clients for his own personal investments between 2007 and 2015, failed to consider the five clients’ personal situations when presenting options trading, and failed to inform clients about proposed options trading that contradict the advice statement for his five clients and considering what his clients have expressed to him.

The ban was imposed in September of 2015, the month after Taylor had left Morgans. Morgans notified the ASIC and the regulator of “breaches that we consider to be significant” via email at the Caloundra office. The email chain obtained through Freedom of Information laws by the Financial Review validates its relation to the derivatives trading by Taylor.

Since then, Morgans has faced several accusations regarding Taylor’s advice. At this time, Morgans and Taylor are defending several actions.

However, sources have revealed Taylor’s options and share advice have been examined by an outside expert retained by Morgans and clients who have suffered from any losses of inappropriate recommendations by Taylor and could be compensated.

The sources also indicated complaints that have been settled would not be re-examined if they ran over the same ground. Some clients have expressed feeling pressured to reach a deal earlier as a result.

Morgan’s review can be traced as far back as January 1, 2008. This is also the same date the Australian Financial Complaints Authority will examine legal gripes.

Morgans has refused to state any connections existing with the AFCA date. It has been mentioned in the AFCA rules that complaints that have already resulted in a settlement between a customer and a financial service provider will not be assessed by the umpire.

The scope of the stockbroker’s review will not be disclosed. Other Morgans’ advisers, including David Wilkins from the Springwood branch in southeast Queensland, have been suspended by ASIC. A five-year ban was imposed on Wilkins until January 2020.

An ASIC document obtained through FOI laws and presented by The Financial Review last year revealed Morgan’s knowledge of the branch and how it was problematic but continued to reject compensation claims lodged by Springwood branch clients initially.

The document also indicated that they referred the customer claims to the federal financial umpire, which would “take some time for the matters to be resolved” instead.

Originally published by Liam Walsh on Financial Review.