The Oaks Group – Morgan Stanley – Multi-million Lawsuits

The Oaks Group Morgan Stanley is a shady financial advisory firm based in Thousand Oaks. They have multiple suspicious provisions in their disclosures that put their clients in damaging situations. 

What’s worse is that they have designed these provisions in such a way that until the clients realize something is wrong, it would be too late. For example, the advisors at the Oaks Group of Morgan Stanely have given themselves the opportunity to charge hidden fees. 

In the following review, I have exposed these shady provisions. Understanding them and recognizing their threat will help you make a better-informed decision when considering working with this firm. 

About the Oaks Group Morgan Stanley

The Oaks Group Morgan Stanley is a financial advisory firm based in Thousand Oaks, California. Their office is located at 100 N Westlake Blvd STE 200, Westlake Village, CA 91362, US and their contact number is 805-494-0215. 

The managing director of this firm is Seth A Haye. Other notable people at this firm are Kathryn Arnold, Elisa Decker, and Duncan Hizzey. 

Some of the services the Oaks Group Morgan Stanley offers include 529 Plans, wealth management, professional portfolio management, trust accounts, financial planning, life insurance, cash management, and retirement planning. 

The firm claims to explore its clients’ aspirations to translate them into specific investment objectives. However, their disclosures suggest that they care more about their personal profits than your financial future. 

Problematic Provisions and Disputes of the Oaks Group Morgan Stanley

Seth A Haye has had multiple legal conflicts with his clients in the past. All of them are listed on his FINRA BrokerCheck listing. FINRA BrokerCheck is a helpful database where you can find out all the necessary information on your financial advisor including their professional experience, the exams they have passed, their state licenses, and the legal disputes they have had. 

The first dispute Seth A Haye had was in 2008. Here, the complaint was about Auction Rate Securities (ARS) where the advisor failed to follow instructions. 

The matter was settled for $1,500,000.00 as it’s related to the 2008 sale of Auction Rate Securities. 

Seth’s second dispute is dated 3-27-2008 and it’s also about Auction Rate Securities. Here, the client alleged unsuitability and misrepresentation. The case was settled for $125,000.

His third dispute occurred in 2009. Here, the client alleged unsuitability with respect to an investment in 2008 but Seth denied the claim. The client had requested $15,000 in damages. 

Investment advisors rarely face one legal dispute in their careers and Seth has faced 3. It suggests he doesn’t put his clients’ interests ahead of his own in most cases. Also, it shows that Seth and his firm are not as reliable as they claim to be. 

Charging Hidden Fees

The Oaks Group Morgan Stanley recommends investment products that charge 12b-1 fees. This is a marketing fee which exposes the client to many shady risks, the biggest of them all is the risk of hidden fees. The 12b-1 fee does not reflect any value as it’s only a promotional fee companies offer to advisors to market their investment products. 

Moreover, it’s a percentage fee so its charges depend on the size of your portfolio. If you’re an ultra-high-net-worth individual, family, or institution, it would be detrimental to your interests to pay this fee. 

The 12b-1 fee increases over time and can add up to a substantial sum. Many investors assume that investments that charge this fee perform better but they are mistaken. 

An SEC study shows that there’s no difference between the returns of investments that charge the 12b-1 fee and those that don’t. As a result, the ROI of investments that charge this fee is worse than those that don’t charge the same. 

Exposing Clients to Unnecessary Risk

A huge issue with the Oaks Group Morgan Stanley is that it charges performance-based fees. This incentivizes them to pursue high-risk strategies regardless of their suitability for their clients. 

High-risk strategies are particularly dangerous in down markets (like the current pandemic-ridden one) and they are detrimental for long-term gains. They have a high failure rate, causing significant losses to the investor. 

Moreover, you can’t hold your investment advisor liable for recommending high-risk strategies. That’s because the agreements say that you “understand” all the risks associated with their recommendations. 

On the other hand, if the high-risk strategy yields any returns, your advisor would be able to charge a cut off of it because of the performance-based fee structure. Hence, it creates a compromising situation for investors. 

The investor takes all the risk and the broker gets most of the benefits. 

This is why charging a performance-based fee is a highly notorious practice in the finance industry. 

Conversely, it’s highly popular among shady and greedy financial advisors. The Chase Group Morgan Stanley is also notorious for abusing this fee structure. 

Verdict 

The Oaks Group Morgan Stanley is a terrible advisory firm. It has an unreliable leadership and multiple terms and conditions that act more like traps rather than instruments for maintaining business ethics. 

Seth Haye’s long history of legal disputes shows that he wouldn’t necessarily put your interests ahead of his own. Furthermore, the provision of charging 12b-1 fee and performance-based fee, makes it more difficult to trust this firm. 

Do think twice before considering working with them. 

2.5Expert Score
Not a Good Choice

The Oaks Group Morgan Stanley is a dangerous firm that puts your financial future at risk for its profits. Their history of disputes and their current provisions indicate that it would be a huge mistake to trust them with any portfolio, large or small.

Trust
2
Service
3
Experience
2.5
Concern for Clients
2.5
Pros
  • None
Cons
  • Questionable leadership
  • Multi-million legal disputes with clients
  • Unethical provisions in agreements
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