Ami Forte, once Morgan Stanley’s most celebrated and prominent financial advisor, with $2 billion in assets under management, fell from grace with a thud two years ago after a brutal Financial Industry Regulatory Authority arbitration and an abrupt dismissal from the firm. Now, just as the ex-superstar seemed to be picking herself up — if not dusting herself off and starting all over again — she’s crying foul over being falsely portrayed, she insists, in a FINRA Acceptance, Waiver and Consent (AWC) settlement agreed to by her former Morgan branch manager, Terry McCoy.
The AWC’s depiction of the embattled FA has all the earmarks of collusion between McCoy and Morgan, Forte’s attorney Robert J. Pearl tells Think Advisor in an interview.
“They bought off Terry McCoy. They’re in cahoots. She’s been made a scapegoat,” argues Pearl, who accuses Morgan of “two-faced, bold-faced lying” to Forte.
In March 2016, a FINRA arbitration panel ordered Morgan, Forte and McCoy to pay more than $34 million to the estate of Roy M. Speer, co-founder of Home Shopping Network. He was Forte’s longtime client and, for nearly a decade, her married lover as well. The award was on Speer’s widow’s claims of unauthorized trading, churning, negligent supervision and more in the nondiscretionary accounts, which totaled $150 million to $200 million, or about 10% of The Forte Group’s AUM.
In the arb, Forte, 60, who worked in Morgan’s Palm Harbor, Florida, branch and was a Chairman’s Club member for 15 consecutive years, firmly denied that she engaged in improper trading in the Speer accounts, saying she had given up that responsibility when she and Speer ended their romance years before the relevant period.
Two days after the arbitration’s conclusion, Morgan fired Forte, who was the firm’s first female advisor to be named a managing director. Forte forthwith filed a multimillion-dollar wrongful termination and defamation suit against Morgan. The case is pending.
Now she is inflamed over statements made about her in McCoy’s AWC, which addresses his failure to appropriately supervise trades and act on red flags in the Speer accounts. Announced in June, it bars him from holding supervisory positions with FINRA firms and fines him $75,000.
The AWC paints Forte as having conducted unauthorized trading in Speer’s accounts long after she had given trading responsibility for them to a broker on her team, Chuck Lawrence. Forte, however, remained broker of record and continued to receive commissions on the trades.
The AWC states that she and Lawrence “… engaged in excessive and unsuitable trading and used discretion without proper authorization in the accounts of RS, a customer of Morgan Stanley.” In the settlement, Speer, Forte and Lawrence are identified by their initials only.
Lawrence was discharged from Morgan the same day that Forte was fired. As branch manager, McCoy did not receive equal treatment: He was given a $178,000 severance package after he signed an agreement, in November 2016, to “cooperate with and assist Morgan Stanley with any investigation, regulatory matters, lawsuit or arbitration in which Morgan Stanley is a subject, target or party and as to which [McCoy] may have pertinent information,” as the document stipulates.
In view of that agreement, McCoy’s AWC could well have been written in collaboration with Morgan to damage Forte’s wrongful termination case against the firm, Pearl argues.
On top of that, heading the FINRA region investigating the Speer matters is a former Morgan employee, Tom Nelli. That is “a point of particular concern,” Forte stressed in an email to this reporter, sent via Pearl.
Nelli, previously a Morgan compliance officer, is now a FINRA senior vice president and regional director.
Meanwhile, extensive research that Pearl conducted reveals that behind the scenes in Palm Harbor, McCoy was attempting to revamp Roy Speer’s estate plan with changes that would have generated millions of dollars to him upon the executive’s death.
McCoy was earlier accused of undue influence in connection with another Morgan client. The firm was indeed aware of that but apparently chose to ignore it when the Speer situation came to the fore.
Lynnda Speer’s arbitration suit claimed that husband Roy, said to be suffering from diminished mental capacity during his final years, had been exploited by Morgan Stanley. Soon after his death in 2012, Ms. Speer, long estranged from her spouse but aware of his nearly decade-long romance with Forte, launched the arbitration against Morgan.
The firm, which paid the entire arb award, has pursued Forte for her contribution but asked McCoy to pay nothing, according to Pearl.
Further, this past January Forte received a Wells notice warning that FINRA would recommend disciplinary action against her for potential rules violations prohibiting excessive trading. No charges have yet been filed. Lawrence also received a Wells letter, Pearl says.
“It is telling that to date there has been no announcement of any regulatory action by FINRA against Morgan Stanley regarding the Speer matters,” Forte wrote in her email.
McCoy’s AWC came just as Forte, based near Tampa, Florida, has begun a career resurrection of sorts. In March of this year, Pinnacle Investments announced it hired her as chief business development officer. She and the firm are now defining her responsibility to bring advisors to Pinnacle’s new Tampa-area office, Pearl says.
“I’m so pleased to be at a firm that places a high value on women, puts the interest of its customers first and has high ethical standards,” Forte enthuses in the email.
For two years, she “couldn’t get hired,” according to Pearl, because people in the industry whom she approached regarded her as “toxic.”
Morgan Stanley and FINRA declined to comment for this article. McCoy’s attorney, Burton Wiand, did not respond to a request for comment.
ThinkAdvisor recently interviewed Pearl, speaking by phone from his office in Naples, Florida. Founder of The Pearl Law Firm, he specializes in securities and business litigation and arbitration.
Here are excerpts from our conversation:
THINKADVISOR: To what extent, if any, do you think Morgan Stanley played a role in the way Ami Forte was portrayed in Terry McCoy’s AWC?
ROBERT PEARL: They bought off Terry McCoy. They’re in cahoots. I think Morgan Stanley’s arrangement with McCoy for him to cooperate with them in future litigation or regulatory investigations is specifically designed to help them against Ami Forte and to hurt her case against them. She’s been made a scapegoat. There’s absolutely no question about that.
What, for example, leads you to believe that McCoy and Morgan collaborated on the AWC?
The last day of my taking McCoy’s deposition under oath happens to be the day he signed that AWC. I suspect they deliberately waited for him to sign it until I was finished conducting his deposition so that when I found out about the AWC, it would be too late to ask him about it.
What are differences in how Morgan treated Ms. Forte and Mr. McCoy after the Speer arbitration?
Morgan Stanley is beating the drums that they have a right to go after Ami Forte for her share of the $34 million arbitration award. But guess who they’re not going after? Terry McCoy.
After the arb, what action did Morgan take regarding McCoy?
They didn’t fire him. Instead, they entered into an agreement with him giving him a generous severance package and extracting from him an agreement to cooperate with Morgan Stanley. They released him from any claims related to the Speer case — all the while being aware that he had previously been accused of undue influence with another client.
We learned from our research that McCoy had convinced that client to name him as the sole beneficiary of his estate. After his death, the family sued, alleging undue influence by McCoy. He settled by permitting the estate to pay out $250,000 to the family from his share, but he kept the entire balance.
Where does Morgan enter the picture?
As part of the settlement, McCoy insisted that the family’s lawyer write a letter to Morgan Stanley exonerating him, [saying] that the claims against him were being dropped. So the firm knew of these allegations of undue influence before the Roy Speer case was filed.
Did your research uncover any parallels to the Speer situation?
Yes. Terry McCoy had been angling to benefit from Roy Speer’s estate. He hired the lawyer who was working with Speer to change his will and trusts to eliminate his wife Lynnda and name McCoy trustee of Speer’s revocable trust and a trustee of the Roy Speer Foundation. But the documents were never signed. I don’t know why. But Lynnda Speer knew about the plan.
How do you figure that?
I know she was paying Speer’s driver to report back to her [what he overheard] in the car. He told her that he heard Speer and the lawyer talking about Terry McCoy being named as trustee and getting a $500,000-a-year fee and a one-time $5 million fee for being trustee of Roy Speer’s trusts.
What is Ms. Forte objecting to specifically in McCoy’s AWC?
[Statements] that she was directing or participating in unauthorized and excessive trading in the Speer accounts. That’s flatly wrong. She was on the accounts as the broker of record, but she had given up trading responsibility for those accounts years before. The only reason she was in that case is because Speer and she used to be romantically involved.
But didn’t the fact that she remained broker of record bear significance in the FINRA panel’s decision?
At the arbitration, a Morgan Stanley supervisor testified that it didn’t matter what Ami participated in or knew about [regarding Speer’s accounts] but that she was automatically liable because her name was on the account. That is a completely incorrect recitation of the law and rules in the industry. She wasn’t responsible for somebody else’s trading in those accounts.
When things were starting to get Byzantine, why didn’t she just resign from Morgan?
She thought the firm had her back. This is a woman who had been constantly defending Morgan Stanley. During the financial crisis, the firm asked her to reassure people that they weren’t in trouble, which she did. She never thought that people she believed to be her friends would turn on her. She had talked to Bill McMahon, who was senior management, below chairman. He said, “When this thing [arbitration] is over, you’ll be back where you belong.” But they were setting her up to take the fall. There’s no question.
But after the Speer arb was filed, they did admonish her about certain infractions, correct?
They told her, “We have to take some disciplinary action in light of these allegations about your relationship with Roy Speer and some liens that were placed on you that weren’t disclosed to us.” So they issued a Letter of Reprimand, which says, essentially, “You need to review our policies.” She was told that that was the end of it. But then they used those same grounds to terminate her. They promised her she wouldn’t be terminated, but she was. It was two-faced, bold-faced lying as to what their plans were. They threw her under the bus.
As the broker of record, didn’t Ms. Forte receive written information about the Speer trades for which she was collecting commissions?
She was entirely unaware of the specifics of the trades because they were being handled by another broker, Chuck Lawrence, working with Morgan Stanley’s trading desk.
Who directed Lawrence to make the Speer trades?
Nobody. He was a broker. Ami wasn’t supervising him. She didn’t even have a supervisor’s license. He was being supervised by Terry McCoy.
So now she’s about to start a new job. How did her job search go?
She was unable to find other employment. One wirehouse wouldn’t even open an investment account for her because they said she was “toxic.” We talked to a number of other firms and recruiters. Nobody was interested. One consultant who helps financial advisors said he wouldn’t work with her because “she’s too toxic.”
How did she make the connection at Pinnacle?
She contacted a firm, which didn’t have an available position but was familiar with Pinnacle and recommended that she get in touch them because of their women-friendly environment and interest in expanding its reach into Florida.
Apparently they had no problem concerning Ms. Forte’s legal difficulties?
They vetted her carefully. They’re smart people and know she’s a good person. She’s met a ton of people through them.
Why did Pinnacle’s press release announcing her hiring as chief business development officer also say she joined as “financial advisor”?
I think it’s because her FINRA registration transferred to Pinnacle, although she isn’t currently acting in the role of an advisor. She can’t, not as yet. Beyond that, I’m not sure. Her role doesn’t involve engaging in any securities or investment advisory activities. She’s not going to be providing financial advice to anyone until this litigation is over.
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