Morgan Stanley Must Pay $34M to Widow of Home Shopping Network Co-Founder
An arbitration panel ordered Morgan Stanley to pay about $34 million to the widow of the co-founder of Home Shopping Network. She alleged her husband's advisor at the wirehouse had been excessively trading and using unauthorized discretion in his accounts, among other misconduct.
The panel made its decision on Friday, according to Scott Ilgenfritz, the attorney representing Lynnda Speer, wife of Roy Speer, who was 80 when he died in 2012. The couple had been married for 52 years.
Roy Speer had an affair with his advisor, Ami Forte, according to Ilgenfritz, who added that Speer suffered from dementia. Lynnda Speer alleged Forte had taken advantage of her husband's condition and that Morgan Stanley had not properly supervised the activity in the accounts.
Calls to Forte's office were not immediately returned.
"We're very pleased to have prevailed on behalf of our client. She hopes this will send a message about not taking advantage of elderly clients," says Ilgenfritz, an attorney at Johnson Pope Bokor Ruppel & Burns, a Tampa, Fla.-based law firm.
While substantial, the award fell short of what Speer sought: approximately $476 million for compensatory and punitive damages, according to a copy of the award.
A spokesman for the wirehouse said Morgan Stanley was disappointed by the panel's decision and did not believe the award was justified.
"Although disappointing, it is a small fraction of the more than $476 million sought by the claimants. Even so, the award is inconsistent with substantial evidence showing that the accounts were profitable for the client and managed in accordance with his wishes," the spokesman said.
Ilgenfritz says that he thinks the panel awarded damages based partially on the trading activity in the account.
Litigating the case took a long time; the panel held over 150 hearings, according to a copy of the award.
"It was obviously a hard fought battle," Ilgenfritz says.
He said it took a long time to present the evidence, which included hundreds of emails showing that liaisons from the bond trading desk in New York would send an email to a member of Forte's team in Florida, offering a certain number of bonds at a certain price. Ilgenfritz says that "within 5 minutes, the broker would say yes."
"We argued to the panel that given the frequency of that activity there was repeated and rampant unauthorized activity because all the accounts were non-discretionary," he says.
Most of the assets in the accounts were bonds, according to Ilgenfritz.
In addition to damages, the panel awarded attorney's fees to be determined by a Florida state court. Ilgenfritz says that his law firm will file a motion to confirm the award in state court.
Half of the winnings will go to the Roy M. Speer Foundation, a charity, according to Ilgenfritz.
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