BOSTON - State officials have charged Morgan Stanley with dishonest and unethical conduct, saying it ran high-pressure sales contests.

The contests in Massachusetts and Rhode Island focused on the sales of securities-based loans, or SBLs, which let customers borrow against the value of the securities in their investment accounts with their securities as collateral, authorities said.

Democratic Secretary of the Commonwealth William Galvin said 30 financial advisers in the Springfield, Wellesley, Worcester and Waltham offices, in Massachusetts, and the Providence office, in Rhode Island, participated.

Galvin said the contests offered advisers incentives of $1,000 for 10 loans, $3,000 for 20 loans and $5,000 for 30 loans. He said that created a conflict of interest.

New York-based Morgan Stanley disputed the allegations.

Galvin said contests involved a high degree of pressure since a manager closely tracked the performance of the advisers and the private bankers taking part.

The initial sales contest succeeded in nearly tripling the number of SBL accounts opened the year before the contest and generated nearly $24 million in new loan balances, according to a complaint filed by Galvin.

The complaint said the sales contest ran in violation of Morgan Stanley's internal prohibition against them. The complaint said it took the company's compliance and risk office nearly a year to detect the contest, which began in January 2014.

Even after the contest was detected, no immediate steps were taken to stop it, and a new sales contest was begun for 2015 and ran until April of that year, according to the complaint.

"By failing to terminate the sales contest immediately," the complaint said, "Morgan Stanley knowingly allowed the sales contest to continue for months after it was detected."

Morgan Stanley said it strongly objects to the allegations and will defend itself vigorously.

"The securities-based loan accounts were opened only after discussing the product with each client and obtaining their affirmative consent," company spokesman James Wiggins said in a statement.

He said the accounts are "valuable to clients," providing access to low-cost liquidity whenever they choose to access it.

"Importantly, clients pay no fee to open a securities-based loan account," he said. "They are charged only if they choose to borrow money."

The complaint filed by Galvin seeks to stop the company from conducting the sales contests and requires relief for customers who entered into SBLs through them. It also seeks an administrative fine.

News from © The Associated Press, 2016