William Galvin, the Secretary of the Commonwealth of Massachusetts, is alleging that Morgan Stanley pressurised its brokers to cross-sell securities-based loans or SBLs to clients in a way that obscured risk.

The state’s most senior securities regulator has issued a complaint against the bank, which in recent years has concentrated its efforts on wealth management. He alleges that sales practices were too aggressive, with bankers in Massachusetts and Rhode Island taking part in high-pressure sales contests over a period of 16 months.

Morgan Stanley is denying the allegations, saying instead that the securities-based loan accounts were opened only after its staff discussed the product with each client and obtained their affirmative consent.

Galvin is alleging that the ‘unethical’ sales contests generated $24 million in new loan balances without regard to the bank’s fiduciary duty to each investor. He says that the bank awarded bonuses of up to $5,000 to bankers who sold 30 SBLs.

Galvin’s action follows hard on the heels of last month’s $185 million fine levied against Wells Fargo for setting up two million fake accounts. Commentators are viewing these actions as a renewed regulatory campaign against sharp sales practices.