A fired Morgan Stanley dealer in Westfield, Indiana, was suspended by the Monetary Business Regulatory Authority for 14 months over allegations that he really useful a speculative choices technique that was not in his prospects’ finest curiosity, mismarked trades and communicated via unapproved textual content messages.
Between June 2020 and November 2022, Theodore W. Byrer really useful that 4 prospects—two married {couples}—put money into uncovered, out-of-the-money put choices on fairness index funds. Byrer executed over 560 put choices trades, which resulted in $760,000 in mixed losses and generated $279,000 in commissions, in accordance with Finra.
One of many {couples} had a reasonable danger tolerance and deliberate to retire in 2026, the regulator famous. Regardless of their funding profile, Byrer’s suggestions included choices that expired inside days and would have solely been worthwhile if the underlying index fund fell by as a lot as 10%, in accordance with the settlement.
The fee-to-equity ratio within the 4 shoppers’ accounts reached virtually 69%, effectively above the extent that’s usually thought of extreme buying and selling, Finra stated.
Morgan Stanley had directed Byrer in December 2020 to cease recommending choices trades to at least one buyer after incurring “important” losses, however he continued to commerce by falsely marking virtually 170 trades as “unsolicited” although he had really useful them, in accordance with Finra.
As well as, Byrer positioned not less than 600 choices trades for six prospects with out required authorization. The shoppers “understood” that he was conducting trades within the account however had not offered him with prior written authorization for the accounts to be discretionary, Finra stated.
Byrer additionally used his private cellphone to ship 750 unapproved textual content messages to prospects associated to his securities enterprise, together with the choices buying and selling. Some included “promissory and unwarranted” statements, Finra stated.
“I stand by my earlier assertion that I believe we see 30-40% transfer up over the subsequent month, and I believe we are able to double by February,” Byrer texted one buyer in September 2020.
Finra stated Byrer “willfully” violated the Securities and Trade Fee’s Regulation Finest Curiosity, which topics him to statutory disqualification from the brokerage trade. Finra stated he additionally violated its record-keeping necessities, guidelines in opposition to unauthorized buying and selling and its catch-all Rule 2010 requiring “excessive requirements.”
Finra didn’t impose a financial sanction as a result of Byrer had filed for chapter in March 2022, in accordance with the settlement.
Byrer’s attorneys, James Eccleston and Stephany McLaughlin of Eccleston Legislation in Chicago, didn’t reply to a request for remark.
Byrer, who has been registered solely as an funding advisor with American Unbiased Securities Group since June 2025, additionally didn’t reply to a request for remark. The Eagle, Idaho-based RIA has virtually $1 billion in advisory belongings beneath administration, in accordance with its Type ADV.
Morgan Stanley paid $312,500 to settle three buyer disputes from 2023 and 2024 that included allegations of unauthorized buying and selling and unsuitable suggestions, in accordance with Byrer’s BrokerCheck.
A Morgan Stanley spokesperson didn’t instantly return a request for remark. The agency fired Byrer in April 2023 over allegations of unauthorized buying and selling and utilizing unapproved communications channels.
Byrer, who first registered with PFS Investments in 1998, additionally labored at A.G. Edwards & Sons. and Raymond James & Associates earlier than becoming a member of Morgan Stanley in 2013, in accordance with registration information. He moved to Worldwide Belongings Advisory after being fired from Morgan Stanley then dropped his brokerage license when leaping to B.B. Graham & Co. in 2024.