Adviser fired after affair with elderly client hits Morgan with suit
A fired Morgan Stanley adviser is seeking damages from her former employer for wrongful termination and defamation, according to her attorney.
It's the latest fallout from a $34 million arbitration case that Morgan Stanley lost in March.
Ex-broker Ami Forte was at the center of that case, having had an affair with former client Roy Speer, the co-founder of the Home Shopping Network who died at age 80 in 2012. Speer's wife, Lynnda, brought the case against Morgan, accusing the firm and Forte of breach of fiduciary duty, unauthorized trading, churning and other misconduct.
Speer suffered from diminished mental capacity, Scott Ilgenfritz, Mrs. Speer's attorney, said in an interview earlier this year. Forte and Morgan Stanley had taken advantage of Speer, running millions in commissions, according to Ilgenfritz.
Morgan, which denied those allegations during hearings, fired Forte two days after the panel of three arbitrators ruled against the wirehouse, though they awarded less damages than the roughly $476 million that Mrs. Speer ultimately sought.
After the arbitration panel made its decision, a Morgan spokesman said that the firm was disappointed with the result, and that "the award is inconsistent with substantial evidence showing that the accounts were profitable for the client and managed in accordance with his wishes."
Robert Pearl, Forte's attorney, says the firm reported the reason for termination to be concerns related to the Speer award and disclosure made during hearings, breach of firm policy regarding trading discretion and timely reporting of liens.
AFFAIR WAS KNOWN
Pearl says the move was unfair because her relationship with Speer was already well known to Morgan, and that she did not breach any policy.
"People were well aware of it," the Naples, Fla.-based attorney says.
He notes that the Speer case was initiated in 2013 and that Morgan defended both itself and Forte, yet only fired her after the case was lost. Pearl also says that Forte stopped handling Speer's accounts in early 2008, and that the arbitration case brought by Speer's wife only looked at trading activity from 2009 onwards.
Pearl confirms that Forte as well as several other Morgan Stanley brokers and employees received pay related to the account.
Having fired Forte, Morgan is withholding her deferred and earned compensation, which amounts to several million, according to Pearl. Forte is seeking to reclaim it in arbitration.
"We don't have the exact numbers because Morgan Stanley won't give it to us," he says.
Pearl says the lien issue was resolved years ago and was also known to Morgan. Forte is also seeking to have her record expunged because it defamed her character and "made her unemployable in the industry," Pearl says.
Forte, who started her career in 1994, only has two disclosures on her BrokerCheck record: the Speer award and her termination.
A spokeswoman for Morgan says the firm rejects Forte's claims and looks forward to addressing them in arbitration hearings.
"Ms. Forte's claims overlook the fact that she was already adjudicated as jointly liable for the award based on her conduct. Despite this, Ms. Forte has failed to contribute anything to the amount awarded, and has also failed to repay substantial sums loaned to her in connection with her employment," the spokesman says.