A once top-producing Morgan Stanley broker in Southern California is facing an industry bar after racking up millions of dollars in client complaints from his former professional athlete customers, including former basketball star Chandler Parsons, according to regulatory filings.
The Financial Industry Regulatory Authority’s enforcement division said it has decided to ban Darryl M. Cohen for failing to cooperate with its investigation into allegations of mismanagement of accounts and “suspicious money movement,” according to a disclosure appended to his BrokerCheck record. The regulator began its investigation after complaints from multiple customers, most of whom were current and former professional athletes, about selling away and “facilitation of loans to third parties,” the regulator wrote.
“Cohen’s failure to respond fully and completely to FINRA’s requests stymied an investigation into very serious potential misconduct,” the regulator said.
The industry bar, and an order against Cohen to pay hearing costs of $2,039, was issued on December 30 and will become final on February 16 “if no further action is taken,” according to the disclosure on BrokerCheck.
Cohen, a 24-year industry veteran who had worked at a Westlake Village branch for Morgan Stanley, could not immediately be reached for comment. He had failed to provide key documents, including emails, texts and social media postings; bank account statements; and telephone logs and records, Finra said.
A spokeswoman for Morgan Stanley declined to comment. The firm fired Cohen in March for “allegations relating to the representative’s facilitation of outside client business and transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to engage in inappropriate communications with clients,” according to BrokerCheck.
He had joined Morgan Stanley from Wells Fargo Advisors in 2015 but has not registered with a new firm since the termination, according to BrokerCheck.
Cohen, who started his career at Merrill Lynch in 1997, had qualified based on his production for a managing director title. He had been part of a team that had managed as much as $651 million, according to Forbes, which ranked his father, Marc, as one of the top brokers in the state last year. (Marc was not accused of any wrongdoing and remains an executive director at the firm, according to his BrokerCheck report.)
The son’s BrokerCheck report shows four pending damage claims representing a total of $9.4 million. The largest, for $5 million, had been from Parsons and another pro basketball player, Courtney Lee, who claimed in January 2021 that between 2017 and 2019, “payments were made without prior approval from their accounts and that they were encouraged to use a Liquidity Access Line for real estate and life insurance policies for which they now claim they hold no interest,” according to BrokerCheck and an earlier copy of a CRD Snapshot report from regulators.
One of the parties in the $5 million case split off and filed a separate arbitration for $2 million, according to Cohen’s BrokerCheck, which did not specify whether it was Lee or Parsons.
Parsons, who officially retired last month, had signed a $94 million deal with the Memphis Grizzlies in 2016, according to a sports blog.
The other two claims similarly seek $2.3 million and $100,000 for allegations of unsuitability and misuse of a line of credit.