Former Brokers Bring $20M Whistleblower Suit Against Morgan Stanley

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Former Brokers Bring $20M Whistleblower Suit Against Morgan Stanley

Jaime Feldman and her husband, James Boland, a couple of ex-Morgan Stanley brokers in the firm’s midtown Manhattan branch, have sued Morgan Stanley and the branch manager for $20 million in damages, claiming that they were retaliated against and wrongfully terminated after they blew the whistle on alleged fraudulent activity and securities law violations at the branch.

Feldman and Boland were fired in 2011 with Morgan Stanley claiming they did not meet performance requirements. The couple, however, argue that any performances issues were pretext for terminating them after they made a series of allegations against the firm. They allege that the branch had unlicensed trainees making cold calls to prospects with misleading scripts, brokers were changing client risk profiles, and advisers were working from home without proper supervision.

According to the complaint, interns and trainees at the Morgan Stanley branch were calling people at large corporations, including Pfizer and Verizon, who were close to retiring and had 401(k) plans with Fidelity Investments, attempting to get them to roll over their accounts to Morgan Stanley with the offer of a 15% annual return. After accounts were rolled over, Morgan Stanley’s employees would change the clients’ risk profiles to allow for investments in higher risk closed-end funds.

“This action arises out of defendant’s termination of the employment of plaintiffs because of their objections to and complaints about fraudulent activity and violations of the securities laws at the Morgan Stanley branch office,” the complaint states. “Morgan Stanley terminated the employment of plaintiffs for their ‘whistle-blowing’ activities.”

Feldman reported her worries to David Turetzky, her branch manager, in April 2011. Feldman claims that Turetzky was “indifferent” and ordered her to leave his office. A month later Turetzky fired her and her husband, claiming their performance was substandard.

Christine Jockle, a spokeswoman for Morgan Stanley, claims that the complaints are baseless. She believes that these claims will be dismissed like the other numerous claims brought by the couple since they were dismissed in 2011.

FINRA investigated the branch in August 2011, specifically inquiring about the above allegations subsequent to the plaintiffs’ complaints to the regulatory agency, but the attorney for the plaintiffs was unaware of any enforcement action brought against the branch.

Feldman started working in the industry in 2002 for Metropolitan Life Insurance Co. and then spent four years with Merrill Lynch before joining Morgan Stanley in 2008. Boland worked with Feldman at Merrill Lynch and then joined Morgan Stanley in 2010.

In her complaint, Feldman admits that from time to time her performance did not meet the firm’s internal revenue goals, but she accuses the firm and her adviser of interfering with her ability to prospect.

The midtown Manhattan branch has previously been sued for wrongful termination in a whistle-blower suit. In 2012, a former employee claimed that Turetzky told him not to report alleged violations. Morgan Stanley denied the allegations and said that Turetzky and his supervisors supported an investigation into the employee’s claims. The case settled for an undisclosed amount.

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