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FINRA Bars Timothy Prouty Indefinitely

Jun 8, 2022 Barred Broker

Timothy Prouty (CRD #: 4928098), a broker previously registered with Morgan Stanley, was barred by FINRA, according to his BrokerCheck record, accessed on June 2, 2022. If you have questions about Timothy Prouty’s conduct as a broker, keep reading.

Bar from FINRA

On May 19, 2022, Timothy Prouty consented to the entry of findings that he refused to provide information and documents per FINRA request.

A letter of Acceptance, Waiver & Consent (AWC) alleges that Timothy Prouty’s previous firm, Morgan Stanley, filed a Uniform Termination Notice for Securities Industry Registration (Form U5) disclosing Timothy Prouty’s firing from the firm.

The Form U5 allegedly disclosed that Timothy Prouty was fired due to his submission of transactions under production numbers inconsistent with an agreement he had made with another broker, resulting in a shortfall of revenue being attributed to the other broker.

The AWC concludes that Timothy Prouty’s alleged refusal to provide documents and information violates FINRA Rules 8210 and 2010.

FINRA Rules 8210, 4511, and 2010

FINRA Rule 8210 requires members to comply with FINRA requests for testimony, documents, information, and inspections of books and records.

FINRA Rule 4511 requires firms to maintain accurate books and records, such as records of transactions.

Violations of these and other rules frequently qualify as automatic violations of FINRA Rule 2010, which requires brokers to maintain high standards of professional conduct.

Sanctions

Timothy Prouty was indefinitely barred from associating with FINRA members in all capacities starting on May 19, 2022.

You can read the full AWC here.

Discharge from Morgan Stanley

On November 13, 2020, Timothy Prouty was fired from Morgan Stanley following allegations that he failed to follow an agreement made with another broker by labeling transactions with production numbers inconsistent with this agreement, resulting in a shortfall of revenue being attributed to the other broker.

Misrepresentation Allegations and $500K Fine 

An arbitration agreement filed on November 29, 2016, named Timothy Prouty in allegations concerning his firm, Morgan Stanley. The claimants alleged unspecified breaches of suitability, deceptive trade practices, negligent misrepresentation, negligence in supervision, and breach of contract and implied covenant of good faith and fair dealing.

Claimants were awarded $519,089 as part of this arbitration agreement. You can read the full arbitration agreement here.

FINRA Rule 2111

FINRA Rule 2111 requires brokers to evaluate whether an investment fits their investor’s financial goals. These profiles contain information such as investors’ tax status, age, and other investments.

Investors who rely on brokers for recommendations can potentially recover their losses by pursuing FINRA arbitration.

What is broker negligence?

Brokers can behave in many negligent ways, ranging from unsuitable investment recommendations to unauthorized trading. Investors who believe their losses were caused by broker negligence may be able to recoup their losses through FINRA arbitration.

Background Information

Timothy Prouty 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 has also worked for Morgan Stanley (CRD#:149777) and Citigroup Global Markets (CRD#:7059).

Kurta Law Can Help

If you worked with Timothy Prouty and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com 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.