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Regulation and Compliance > Federal Regulation > FINRA

Morgan Stanley Wins Nearly $2M in FINRA Arb Dispute

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Morgan Stanley was awarded just under $2 million by an arbitrator in a Financial Industry Regulatory Authority Office of Dispute Resolution case that pitted the firm against an ex-representative, according to FINRA.

The firm had claimed former advisor Rajesh Gupta breached the terms of four promissory notes that were executed on March 22, 2014; Nov. 3, 2013; June 16, 2014; and May 11, 2015, by failing to pay the balance owed on the notes after Gupta’s employment ended at the firm, according to the award, which was posted on FINRA’s website April 8.

Morgan Stanley, its legal representative Tracy Gerber of the law firm Greenberg Traurig, and Aaron B. Maduff of the Chicago law firm Maduff & Maduff, who represented Gupta in the dispute, didn’t immediately respond to requests for comment Wednesday.

The firm had requested the principal balance due and owing under the notes in the amount of $1.5 million, plus interest and legal and other fees.

Public arbitrator Lynn Hirschfeld Brahin ended up awarding Morgan Stanley a total of $1.9 million. That included $1.5 million in compensatory damages; $18,884 in accrued interest; $262,991 in pre-award interest; and $93,000 in attorney fees.

Gupta worked for Morgan Stanley from 2013 until he voluntarily resigned March 1, 2017, following “allegations regarding involvement in undisclosed outside activity involving sales of insurance policies,” according to a disclosure on his profile at FINRA’s BrokerCheck website.

Following Gupta’s termination from the firm, there was a May 18, 2018, settlement for $220,000 in a customer dispute in which a client “verbally complained about the loss of value upon the surrender of outside insurance policies recommended by” the advisor between May 2014 and May 2017, according to BrokerCheck. Gupta is no longer registered as a broker or advisor, the site shows.

— Check out FINRA Bars Ex-Morgan Stanley Rep for Not Cooperating With Inquiry on ThinkAdvisor.


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