Morgan Stanley building in New York.

A former Morgan Stanley (MS) advisor has prevailed in a case reviewed by a regulatory arbitration panel, and the wirehouse must pay him about $2.4 million.

Dale Cebert, who works in the exclusive Florida retirement community The Villages, north of Orlando, began work for Morgan Stanley in 2012 but was let go in 2014. Cebert is now affiliated with FSC Securities, part of the Advisor Group of independent broker-dealers.

A FINRA arbitration panel found that Morgan Stanley instigated a “flawed internal investigation that was conducted, acted upon, and reported with reckless disregard for its accuracy and completeness,” according to the panel’s decision, finalized last Monday. The firm also made defamatory statements to the advisor’s clients “in at least a grossly negligent manner (if not with a self-serving, malicious move) … that defamed or were intended to defame [Cebert] in the minds of his customers.”

“We disagree with the panel’s decision regarding this case,” Morgan Stanley said in a statement.

As part of the ruling, Morgan Stanley must alter the advisor’s U-5 form so that it reads he was “terminated without cause.” The firm also must remove its assertion that he was fired for conducting an outside business.

During the two years spent on the arbitration process, Morgan Stanley had requested nearly $10 million in repayments on promissory notes and interest on the notes and some $820,000 for legal and other costs. Cebert had asked for $16 million to $32 million in compensatory damages and roughly $1.2 million for attorney’s fees and related expenses.

According to FINRA, “The panel found that although [Cebert] could have been more diligent and proactive in terms of acclimating himself and his team to some of the requirements and expectations for him and them at [Morgan Stanley], the panel finds a far greater degree of fault on the part of [Morgan Stanley] during [Cebert’s] employment and after his termination.”

Cebert began work in the industry in 1998 at Conseco Financial Securities.

— Check out FINRA Reminds BDs of Arbitration Rights for Clients, Reps on ThinkAdvisor.