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SEC Files Multiple Actions Against Darryl Cohen Alleging Misappropriation

Darryl Cohen (CRD #: 2786613), a broker formerly registered with Morgan Stanley, is involved in multiple pending SEC actions and investor disputes, according to his BrokerCheck record, accessed on May 31, 2023. Read on to learn more about his alleged conduct as a broker.

Pending Disputes

On April 13, 2023, an investor alleged that Darryl Cohen misappropriated funds from his account.

Another dispute, filed on March 23, 2023, alleges that Darryl Cohen violated the suitability rule with regard to investments and a “liquidity asset line” between 2015 and 2023.

FINRA Rule 2150

FINRA Rule 2150 prohibits the improper use of investors’ funds.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

FINRA Rule 2111

FINRA Rule 2111 defines suitable investments as securities that fit an investor’s profile, which describes characteristics such as their tax status, risk tolerance, and age.

Investors who rely on brokers for recommendations may be able to recover their losses by seeking out FINRA arbitration.

SEC Actions

On March 23, 2023, the Securities and Exchange Commission filed a civil complaint and a regulatory action alleging that Darryl Cohen defrauded three investment advisory clients between October 2017 and April 2020.

According to the SEC, Darryl Cohen allegedly misappropriated at least $1 million from these clients by executing unauthorized transfers and through personal expenditures. For example, he allegedly used clients’ money to fund his son’s basketball program, pay off another client, and fund his home improvement projects.

In both the civil complaint and proposed regulatory action, the SEC alleges that Darryl Cohen Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Both actions are currently pending.

Investment Advisers Act of 1940

Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 forbid the use of fraudulent and deceptive schemes or practices.

Pending Criminal Charges

On March 23, 2023, Darryl Cohen was charged with wire fraud, conspiracy to commit wire fraud, and investment advisor fraud. These charges are currently pending.

Bar by FINRA

On December 30, 2021, a FINRA Extended Hearing Panel entered a decision permanently barring Darryl Cohen following his alleged failure to fully and completely respond to multiple requests for documents and information.

These requests were allegedly in connection with an investigation into possible conversion and other improper use of client funds.

FINRA Rule 8210

FINRA Rule 8210 requires members to supply records, information, and testimony upon request by FINRA.

Settled Disputes

In disputes filed on January 22 and October 1, 2021, several investors alleged that Darryl Cohen facilitated payments from their accounts without approval and encouraged them to use a Liquidity Access Line to purchase real estate and life insurance policies. These disputes were settled for a total of $4.075 million.

On April 6, 2021, multiple investors alleged that Darryl Cohen recommended unsuitable investments and credit lines from 2015-2020. This dispute was settled for $1.7 million.

A similar dispute, filed on June 2, 2020, alleged that Darryl Cohen violated the suitability rule by using a Liquidity Access Line to facilitate loans to outside business entities. The client received a settlement of $125,000.

Termination from Morgan Stanley

On March 9, 2021, Darryl Cohen was fired from Morgan Stanley Smith Barney following allegations that he facilitated outside client business activities and transactions that the firm did not know about or approve.

The firm further alleged that he used an unapproved platform to engage in “inappropriate” communications with clients.

Background Information

Darryl Cohen has passed the following exams:

  • Series 65 – Uniform Investment Adviser Law Examination
  • Series 63 – Uniform Securities Agent State Law Examination
  • SIE – Securities Industry Essentials Examination
  • Series 7 – General Securities Representative Examination

He previously worked for the following firms:

  • Morgan Stanley (CRD#:149777)
  • Wells Fargo Advisors (CRD#:19616)
  • Merrill Lynch, Pierce, Fenner & Smith (CRD#:7691)

Kurta Law Can Help

If you worked with Darryl Cohen and you have concerns about your investments, please contact us today at 877-600-0098 or for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.