A fired Morgan Stanley broker in Westfield, Indiana, was suspended by the Financial Industry Regulatory Authority for 14 months over allegations that he recommended a speculative options strategy that was not in his customers’ best interest, mismarked trades and communicated through unapproved text messages.
Between June 2020 and November 2022, Theodore W. Byrer recommended that four customers—two married couples—invest in uncovered, out-of-the-money put options on equity index funds. Byrer executed over 560 put options trades, which resulted in $760,000 in combined losses and generated $279,000 in commissions, according to Finra.
One of the couples had a moderate risk tolerance and planned to retire in 2026, the regulator noted. Despite their investment profile, Byrer’s recommendations included options that expired within days and would have only been profitable if the underlying index fund fell by as much as 10%, according to the settlement.
The cost-to-equity ratio in the four clients’ accounts reached almost 69%, well above the level that is generally considered excessive trading, Finra said.
Morgan Stanley had directed Byrer in December 2020 to stop recommending options trades to one customer after incurring “significant” losses, but he continued to trade by falsely marking almost 170 trades as “unsolicited” even though he had recommended them, according to Finra.
In addition, Byrer placed at least 600 options trades for six customers without required authorization. The customers “understood” that he was conducting trades in the account but had not provided him with prior written authorization for the accounts to be discretionary, Finra said.
Byrer also used his personal phone to send 750 unapproved text messages to customers related to his securities business, including the options trading. Some included “promissory and unwarranted” statements, Finra said.
“I stand by my earlier statement that I think we see 30-40% move up over the next month, and I think we can double by February,” Byrer texted one customer in September 2020.
Finra said Byrer “willfully” violated the Securities and Exchange Commission’s Regulation Best Interest, which subjects him to statutory disqualification from the brokerage industry. Finra said he also violated its record-keeping requirements, rules against unauthorized trading and its catch-all Rule 2010 requiring “high standards.”
Finra did not impose a monetary sanction because Byrer had filed for bankruptcy in March 2022, according to the settlement.
Byrer’s lawyers, James Eccleston and Stephany McLaughlin of Eccleston Law in Chicago, did not respond to a request for comment.
Byrer, who has been registered solely as an investment advisor with American Independent Securities Group since June 2025, also did not respond to a request for comment. The Eagle, Idaho-based RIA has almost $1 billion in advisory assets under management, according to its Form ADV.
Morgan Stanley paid $312,500 to settle three customer disputes from 2023 and 2024 that included allegations of unauthorized trading and unsuitable recommendations, according to Byrer’s BrokerCheck.
A Morgan Stanley spokesperson did not immediately return a request for comment. The firm fired Byrer in April 2023 over allegations of unauthorized trading and using unapproved communications channels.
Byrer, who first registered with PFS Investments in 1998, also worked at A.G. Edwards & Sons. and Raymond James & Associates before joining Morgan Stanley in 2013, according to registration records. He moved to International Assets Advisory after being fired from Morgan Stanley then dropped his brokerage license when jumping to B.B. Graham & Co. in 2024.