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Regulation and Compliance > Federal Regulation > FINRA

Morgan Stanley Sued by Ex-Broker Over Arb Award

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What You Need to Know

  • A former Morgan Stanley broker has filed a complaint asking that an arbitration judgment in the firm’s favor be vacated.
  • The former broker is also seeking $10 million-$21.1 million in compensatory damages due to the harm he claims Morgan Stanley did to his securities career.
  • In the complaint, he alleged he was wrongfully terminated in 2017 and defamed by Morgan Stanley.

A former Morgan Stanley broker sued the wirehouse for a second time on Tuesday in an effort to have a May arbitration judgment that was in the firm’s favor vacated.

In a complaint filed in U.S. District Court for the Northern District of Ohio, Todd C. Kalish alleged he was wrongfully terminated in 2017 and defamed by Morgan Stanley.

Kalish initially sued Morgan Stanley in 2019, making the same allegations as well as a claim of intentional interference with contract.

Because Kalish and Morgan Stanley were members of the Financial Industry Regulatory Authority, they were compelled to arbitrate their dispute, which ended up being delayed due to the COVID-19 pandemic, according to the complaint filed on Tuesday.

In the arbitration statement of claim that he filed with FINRA on Sept. 27, 2018, Kalish alleged that the Form U5 filed by Morgan Stanley as part of registration records maintained by the Central Registration Depository was “defamatory in nature.” The firm terminated Kalish “despite knowing that accusations made against Claimant were not credible,” according to the statement of claim.

In arbitration, Kalish requested damages in excess of $1 million, including punitive damages, expungement of the Form U5 filed by the firm and that all forum costs be assessed against Morgan Stanley.

In response, Morgan Stanley requested that the statement of claim be dismissed in its entirety and Kalish be ordered to pay it $28,397.47 plus interest, legal fees and costs, and such other and further relief as the panel deemed just and proper.

On May 12, a three-person arbitration panel ruled in favor of Morgan Stanley, ruled against Kalish and ordered him to pay $28,397.47 to the firm in damages.

In his complaint filed on Tuesday, Kalish asserted that the award delivered by the arb panel in Morgan Stanley’s favor was “not actually signed by any of the arbitrators” and he demanded that their signatures be provided. Those signatures were not provided, according to his complaint.

In June, Morgan Stanley demanded that FINRA initiate suspension proceedings against Kalish because he did not pay the award within the 30 days he was given. Kalish requested a hearing and claimed the arb award had to be vacated because of the allegedly missing signatures and because there was no order for the evidence about those allegedly missing signatures to be produced.

In his latest complaint, Kalish is also seeking $10 million to $21.1 million in compensatory damages because of the harm Morgan Stanley did to his securities career.

Morgan Stanley declined to comment on Wednesday.

 (Photographer: Victor J. Blue/Bloomberg)


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