Ex-Morgan Stanley Lawyer Alleges Retaliation After Raising Corruption Concerns

The bank in 2009 re-evaluated and enhanced its compliance program regarding the Foreign Corrupt Practices Act. That effort included “enhanced FCPA approval procedures in the merchant banking and real estate businesses (based on risk assessment).” The bank also said it increased training “specifically targeting FCPA compliance.”

U.S. Labor Department headquarters in Washington, D.C. Credit: Mike Scarcella / NLJ

Garvey: Ethical responsibilities are “not for sale.”

Garvey, who attended the U.K.-based University of Law and who was admitted to the New York state bar in 2000, filed whistleblower allegations in 2016 against Morgan Stanley, where he was employed at a foreign subsidiary in Hong Kong. He would spend a decade at the bank.

Available public records—including rulings from Merck—reveal general details about Garvey’s whistleblower claims. Many other documents remain confidential. The Labor Department, citing Morgan Stanley’s request for a order shielding broad disclosure of documents, in March would not provide The National Law Journal certain requested records. The agency did furnish a redacted copy of Garvey’s complaint.

Garvey, according to his complaint, said he became aware “in early 2015 … that Morgan Stanley was engaged in conduct in violation of the U.S. Foreign Corrupt Practices Act and other U.S. securities laws.” The “engagement of a consultant in India [gave] rise to potential corruption related concerns,” according to other records in Garvey’s case.

Garvey claimed he “objected to these practices repeatedly and strenuously, first by advising the individuals involved not to pursue their proposed course of action and, when that failed, by escalating the issue to senior management.”

Morgan Stanley hired an outside law firm to investigate the consultant’s work. That outside firm, which was not identified in Merck’s rulings, presented preliminary conclusions in October 2015. According to Garvey, Morgan Stanley’s chief legal officer, Eric Grossman, allegedly “reacted abruptly and angrily, first personally firing [outside counsel] and then immediately imposing a global hiring freeze.” Morgan Stanley subsequently hired another outside firm to continue the investigation, according to Garvey. Grossman has served as the chief legal officer at Morgan Stanley since 2012.

“Mr. Garvey raised his concerns about the relevant behavior to the individuals involved, their supervisors, his own immediate and ultimate supervisors and the company’s senior management in New York,” Garvey wrote in his complaint. “The company did not heed the warnings and instead chose to conceal the wrongdoing and to protect the individuals responsible for the illegal conduct.”

Garvey also described a visit that Philip Quirk, a Morgan Stanley managing director and the bank’s general counsel for Europe, the Middle East and Africa, made to the Hong Kong office in December 2015.

In a “very frank conversation,” Garvey said he expressed concerns to Quirk about what he viewed as efforts to cover up alleged misconduct. During that conversation, Garvey claimed, Quirk “stated clearly and unambiguously that [Garvey] should remember that he would require the support of the bankers involved … in order to be eligible for any future promotions at Morgan Stanley.”

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According to Morgan Stanley, Garvey told Morgan Stanley’s general counsel for investment management, Chris O’Dell, that he feared he would never receive a promotion to managing director as long as Quirk was his supervisor. Morgan Stanley said O’Dell tried to convince Garvey not to resign and told him that the path to managing director, while not easy, was not an impossibility.

Morgan Stanley, according to Labor Department records, contends Garvey left the bank voluntarily after growing dissatisfied with his salary and searching for new employment in Spain. Garvey, according to the bank, was searching for a new job “over a full year” before he resigned.

Far from forcing Garvey out, Morgan Stanley said it gave Garvey a positive performance review and a $122,540 bonus—the second largest awarded to the 23 executive directors in the bank’s Asia Pacific legal department—at the end of 2015, just months before his resignation. Promotions to managing director are rare, according to Morgan Stanley.

“No reasonable person would feel ‘compelled to resign’ on the heels of receiving [a $122,540] bonus and a positive performance review,” Morgan Stanley said in filings in Garvey’s case.

Garvey said the alleged adverse employment actions included a cut to his salary in January 2016 and what he described as a “blunt recommendation that he should look at his options elsewhere.”

An investigator at the Occupational Safety and Health Administration, which investigates claims arising under the whistleblower-protection provisions of the Sarbanes-Oxley Act, in March 2017 dismissed Garvey’s retaliation claim. The investigator concluded “the evidence shows [Garvey] has not suffered an adverse action.”

Garvey appealed the finding to the Labor Department’s administrative law judge office, where the dispute is now pending. He said in filings that “an attorney’s professional and ethical responsibilities are mandatory and not for sale.”

Merck in February turned down Morgan Stanley’s request to dismiss Garvey’s claims. “When taken as true,” Merck wrote, “these factual allegations describe sufficiently threatening, intimidating and coercive behavior.”