• September 10, 2024
• Morgan Stanley

Craig Sherman Thistlethwaite (CRD#: 2507050) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 1995 and previously worked with IDS Life Insurance Company; American Express Financial Advisors Inc.; Dean Witter Reynolds Inc.; McDonald Investments, Inc.; Citigroup Global Markets, Inc.; and Morgan Stanley.

Current and Past Allegations of Conduct Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in July 2024, without admitting or denying the findings, Thistlethwaite consented to the sanctions and to the entry of findings that he exercised discretionary authority to effect trades in two related customers’ accounts without obtaining written authorization from the customers and without his member firm having accepted the accounts as discretionary. The findings stated that Thistlethwaite caused the firm to maintain incomplete books and records by exchanging business-related communications, including communications concerning securities transactions, with a firm customer via text message from his personal cellular device without the firm’s approval. Because these communications were sent via an unapproved communications platform, they were not captured and preserved by the firm. Therefore, Thistlethwaite violated FINRA Rules 4511 and 2010. Respondent also consents to the imposition of the following sanctions: a 60-day suspension from associating with any FINRA member in all capacities and a $10,000 fine.

For a copy of the FINRA Disciplinary Action Details, click here.

In addition, Craig Thistlethwaite has three other FINRA disclosures:

• January 2023—Discharged by Morgan Stanley, “Concerns related to entering transactions in two related clients’ accounts without receiving verbal confirmation immediately beforehand, engaging in written Firm-related communications with the client on his non firm approved device, and purchasing a timeshare from the client without firm approval.”
• February 2022—“ Claimant alleges, inter alia, unsuitability with respect to stock options strategy – May 2015 to May 2021.” The customer dispute settled for $4,200,000.
• August 2021—“ Thistlethwaite was a subject of a customer complaint against his member firm that asserted the following causes of action: respondeat superior; negligence; breach of fiduciary duty; failure to supervise; breach of FINRA rules; breach of contract; fraud; unauthorized trading and breach of FINRA Rules 2010, 2020, and 3260; and violation of the Florida Securities and Investor Protection Act.” FINRA issued an award in the amount of $6,101,020.08. For a copy of the award, click here.

For a copy of Craig Thistlethwaite’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.