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Client Represented by Lax & Neville Wins $1.8MM Award Against Morgan Stanley for Unsuitability and Failure to Supervise Investment in WisdomTree (WETF)

On August 21, 2023, a retired artist and teacher of the visually impaired represented by Lax & Neville LLP won a FINRA award against Morgan Stanley for its years-long recommendation that she invest her savings in WisdomTree (WETF), a sponsor of exchange traded funds ("ETFs") and asset manager. Over a period of nearly seven years, the customer's Morgan Stanley advisors, David and Todd Wachsman, solicited numerous purchases of WisdomTree stock even as its price fell and her position became highly concentrated. WisdomTree stock ultimately made up the vast majority of her networth. Despite numerous red-flags and internal recognition that the position was highly concentrated and sustaining substantial losses, Morgan Stanley permitted the Wachsmans to recommend additional investments in WisdomTree for years, including selling risky put options that significantly increased her exposure to decline in WisdomTree's price, decimating her savings. Morgan Stanley's primary defense was that, over the lifetime of the account prior to the first WisdomTree purchase a decade ago, Morgan Stanley had made money for the customer, a retiree in her mid-seventies, and was therefore entitled to bet it all on a single-stock strategy. Additionally, Morgan Stanley took the position that they warned the customer of the risks involved. However, it still allowed the Wachsmans to recommend that she purchase more WETF, that she sell other securities rather than WETF, and that she hold the overly concentrated position they built in her accounts.

After considering the pleadings, testimony and evidence presented at the hearing, the Arbitration Panel rejected Morgan Stanley's defense and unanimously awarded the customer $1.8 million, including the entirety of damages caused by Morgan Stanley's investment in WisdomTree market adjusted to account for Morgan Stanley's mismanagement of her account during an historic bull market.

The Arbitration Panel also denied the expungement requests made on behalf of the financial advisors, Todd Wachsman and David Wachsman. To view this Award, Karen Busch v. Morgan Stanley Smith Barney, LLC - FINRA Case No. 21-00203, click here.

To discuss this arbitration award, please contact Brian Neville or Matthew Plant at (212) 696-1999.


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The Lax & Neville team were total professionals in handling our case. They've clearly had quite a bit of experience handling complex legal matters in many jurisdictions and courts. I was impressed with their professionalism coupled with persistence in arguing a very complete and well-structured case. I highly recommend their services. Anonymous
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I am very, very happy with the outcome of my case and my experience with Lax Neville could not have been better. The entire team of attorneys and staff are real professionals, they always had time to answer my many questions about my case. I was treated with compassion and respect. I am so grateful I chose to work with Lax Neville. Anonymous
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This is an official " thank you" for all your hard work. It really was a pleasure to have you represent me, and I enjoyed seeing you, Rush and Sandra in action. I think Lax and Neville epitomizes the phrase "quality vs quantity". I think I told you before that I spent a lot of time researching firms; in this case things worked out, I picked the best firm. I hope I never need your services in the future, but if I do I know I found the best attorneys for these types of legal issues. Anonymous
★★★★★
What transpired at the [redacted] was nothing less than a truly masterful and exceptional experience regarding your intelligence, professionalism, preparedness for my case, teamwork and erudite knowledge pertaining to Securities Law, FINRA and the SEC. The facility and ease of how the case was handled, the systematic questioning of all the witnesses to obtain the facts necessary to prove our case, the preparation of the critically conclusive information and documents, the commanding coup de gras closing argument and your tireless consideration and respect for the Panel and [redacted] was, is and will continue to epitomize my feelings and conclusion that what transpired over those long three days was nothing less than raw and unabashed brilliance. Anonymous
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