A former Morgan Stanley broker has been ordered to repay more than $2 million of his recruiting bonus after the firm said he left before his contract expired. Advisor Wilhelm Nash, who left Morgan Stanley in 2010 after two years at the firm, departed to Credit Suisse before his upfront loans had fully vested, the firm said in a complaint filed with FINRA.

To incentivize an advisor to move, many firms offer top advisors large recruiting packages with a sizeable upfront loan. That loan is considered paid off if an advisor stays with the firm for a certain amount of years or meets certain growth targets.

If an advisor moves early, however, the firms will frequently litigate to recoup the money, according to attorney Eva Posman, an attorney in New York. "The firms are usually pretty adamant," Posman says generally of the industry. "They don't like to set a precedent." Posman initially represented Nash but represents brokers in similar cases.

Posman and another former attorney of Nash's declined to comment on his case, citing client confidentiality. Nash did not return a request for comment. His current firm, UBS, declined to comment, as did Morgan Stanley.

Morgan Stanley valued the remainder of Nash's three promissory notes at $1.6 million, $256,182 and $144,815. An arbitration panel found Nash liable for all three, in addition to $238,610 for Morgan Stanley's attorney's fees and $25,515 in additional costs.

Nash initially retained legal counsel and filed a $2 million counterclaim in which he argued that he had left due to "constructive discharge," meaning that conditions had been made so difficult at the firm that he had no choice but to leave. Ultimately, however, he dismissed his attorneys and did not show up for the hearing, according to the arbitration award.

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