State officials: Morgan Stanley ran unethical sales contests

Massachusetts officials have charged Morgan Stanley with dishonest and unethical conduct for running high-pressure sales contests.

The contests in Massachusetts and Rhode Island focused on the sale of "securities based loans." The loans let customers borrow against the value of the securities in their investment accounts with their securities as collateral.

Democratic Secretary of the Commonwealth William Galvin says 30 financial advisers in the Springfield, Wellesley, Worcester and Waltham offices, in Massachusetts, and the Providence office, in Rhode Island, participated.

Galvin says the contests offered advisers incentives of $1,000 for 10 loans, $3,000 for 20 loans and $5,000 for 30 loans. He says that created a conflict of interest that violated the financial firm's fiduciary duty.

An official for New York-based Morgan Stanley says the company strongly objects to the allegations and will defend itself vigorously.