FINRA Panel Orders Morgan Stanley to Pay Merrill $1 Million

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Helena, Montana has ordered Morgan Stanley to pay Merrill Lynch nearly $1 million for unscrupulous recruiting tactics involving brokers in their Bozeman, Montana office. (FINRA #09-03424; Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Morgan Stanley & Company, Inc., et al.)

The claim alleged raiding, breach of fiduciary duty, breach of duty of loyalty, tortuous interference, unfair competition and unjust enrichment. The claim apparently arose out of Morgan Stanley’s recruitment of a team of brokers out of Merrill Lynch’s Bozeman office. The team of five, led by William Claridge and Patrick Lewis had $215 million under management.

The award entered on November 9, 2010, called for Morgan Stanley to pay $552,875 in compensatory damages to Merrill Lynch, in addition to $400,000 in punitive damages and $16,050 for forum fees of the arbitration.

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