Big broker hit with $20 million whistleblower suit

Big broker hit with $20 million whistleblower suit

Big broker hit with $20 million whistleblower suit A husband and wife advisor team at a Morgan Stanley branch in New York City have filed a $20 million suit against the broker alleging that the firm and a branch manager terminated their employment without cause after the couple blew the whistle on wrongdoings at their Manhattan branch.

“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 reads. “Morgan Stanley terminated the employment of plaintiffs for their 'whistle-blowing' activities.”

Morgan Stanley’s version of the story is that it terminated Jaime Feldman and her husband James Boland in 2011 for not meeting specific performance targets.

"We believe this latest claim is equally without merit and will be dismissed," wrote Morgan Stanley spokeswoman, Christine Jockle.

The couple see things differently.

They believe their former employer used the performance issue as an excuse to get rid of them after they alleged brokers were changing client risk profiles, working from home without proper supervision and providing unlicensed trainees with cold calling scripts that were misleading prospective clients.

The most significant allegation is that trainees were calling employees at big companies to get them to move their 401(k) plans to Morgan Stanley using a 15% return as an inducement to do so. Once the transfer was completed the broker ratcheted up the client’s risk profile to be able to invest in riskier closed-end funds.

Finra is said to have investigated the matter in August 2011 but could find no wrongdoing by Morgan Stanley.