What the Case of a Broker Who Had an Affair With a Billionaire Client Means for Advisors

When Morgan Stanley superstar advisor Ami K. Forte met high-profile billionaire Roy M. Speer at a ritzy Florida party in 1999, the encounter had every hallmark of a match made in financial services heaven.

But in toppling Forte from her lofty perch 14 years later, the pair’s personal relationship served to generate a scandalous, litigious hell. Indeed, the years-long affair that client and advisor would enjoy — launched after the married Speer, co-founder of television’s Home Shopping Network, signed on with the divorced Forte — has had ravaging consequences for both Forte and Morgan Stanley. Booming reverberations continue to this day.

Tangled Tale

It is a tangled web — and cautionary tale — encircling the issues of personal client-advisor relationships, elder exploitation and gender discrimination.

The first female FA to be named a Morgan Stanley managing director, Forte was a Chairman’s Club member for 15 consecutive years and No. 1 on Barron’s Top 100 Women Financial Advisors list two years in a row.

Until a contentious three-year arbitration case by Speer’s widow led to Forte’s undoing, she was arguably the firm’s most prominent and celebrated financial advisor.

So far, the brouhaha has cost Morgan Stanley more than $34 million. Loss of her reputation and job is the price that Forte, 58, has paid. And now, all her retirement savings are at stake too.

The Forte Group, at the wirehouse’s Palm Harbor, Florida, branch, managed $2 billion in assets. Of that, Speer’s fixed-income account totaled $150 million to $200 million, or about 10%. In the years that Forte managed investments for the active bond trader, on Forbes’ 400 List of richest Americans, he realized a net gain of $24 million.

In 2012, Speer died at age 80. The following year, his widow, Lynnda L. Speer, filed an arbitration case against Morgan Stanley, Forte and her branch manager. Speer alleged churning in her late husband’s account from 2009 through 2012, citing, specifically, 12,000 unauthorized trades generating nearly $40 million in commissions paid to Forte.

Speer argued that the FA and Morgan Stanley had taken advantage of her spouse, who, she claimed, suffered diminished mental capacity in his later years and was “wheelchair-bound and diapered … and attended to daily by a full-time caregiver.” During his final year, he was under a guardianship.

After 142 sessions, on March 21 of this year, a Financial Industry Regulatory Authority panel in Tampa, Florida, ordered Morgan Stanley, branch manager Terry McCoy and Forte to pay more than $34 million on Speer’s claims of unauthorized trading, churning, breach of fiduciary duty, negligent supervision, elder exploitation and unjust enrichment.

“I’m very pleased the arbitration recognized that Ms. Forte and her colleagues breached their fiduciary duties to Roy … and exploited him during a time of his continuing mental and physical decline … We’re hopeful the outcome of his case will prevent other elderly investors from being taken advantage of by their stockbrokers,” Speer reportedly commented.

Two days later, Morgan Stanley, based on the panel’s award, fired Forte. Now, months later, the wirehouse still refuses to release her millions of dollars in retirement savings, which she maintained at the firm — including 401(k) plan investments, deferred compensation, earned income and Morgan Stanley stock — and is pressing her to pay a share of the arbitration award.

Forte remains in total shock. “Morgan Stanley trotted me out as an example of how women can succeed at the firm. I was their spokesperson to make them look good with women. I helped them recruit women. Now I’ve been discarded and treated like a commodity. They threw me under the bus. I’m 58 years old. How am I going to survive?” Forte says, tearfully, in an interview.

To recoup her assets and good name, Forte brought a multi-million-dollar wrongful termination and defamation suit against the firm in May, claiming it filed a “fabricated” Form U-5 about her discharge, making it unlikely she’ll ever work as a financial advisor again. The U-5 states that she was terminated because of “concerns relating to disclosed arbitration award … issues with conduct including … adherence to … firm policy regarding use of trading discretion, concealed personal relationship with client and timely reporting of liens.”

Forte denies responsibility for the alleged unauthorized trades since, she says, she’d given up trading authority in Speer’s account in late 2007, when she and the billionaire ended their affair. Her name, however, remained on the account as the advisor of record.

Morgan Stanley’s response to Forte’s arbitration claim states: “Ms. Forte’s claims overlook the fact that she was already adjudicated as jointly liable for the award based on her conduct. Despite this, [she] has failed to contribute anything to the amount awarded, and has also failed to repay substantial sums loaned to her in connection with her employment. We categorically reject her claims and look forward to addressing all these issues at a hearing on the merits.”

Forte, with Morgan Stanley for 16 years, had received sizeable retention bonuses.

The former advisor’s suit against the firm was a smart pre-emptive move, “but [Morgan Stanley] rightly terminated her based on the arbitration panel’s findings. And the firm was right to come after her for her pro rata share of the award,” says Erwin Shustak, a longtime securities arbitration attorney and managing partner, Shustak, Reynolds & Partners.

Elder Issue

Elder exploitation, the thrust of Speer’s suit, is an issue of increasing importance and one to which mindful advisors should turn their attention.

“Awareness of elder exploitation is rising because of the aging boomer population. Certainly, the number of elderly customers dealing with diminished cognitive capacity is increasing,” says Bryan Ward, a partner in Holcomb + Ward, a law practice that focuses on financial services disputes.

Thus, it’s not surprising that the frequency of elder exploitation is “absolutely increasing,” according to Scott Silver, a Fort Lauderdale, Florida-based attorney who specializes in arbitrations and investor fraud court cases.

In one recent action, a 94-year-old investor, whom Silver represented, lost more than $1 million in assets in under 90 days. He was a client of a well-known online discount firm that refused to put a stop on his trading even though the man’s advisor “begged it to do so because his trading had become completely erratic and irrational,” Silver says. The case was settled.

In Forte’s experience working at Morgan Stanley, if something seemed amiss concerning an elderly client’s mental capacity, “it was protocol that there [be] communication with the family. Or if someone in the family was concerned, they’d call; and we’d sit down and discuss it with the client. But that never happened with [Speer]. No one from the family ever called,” she says.