After Losing Morgan Stanley TRO Cases, Former Manager Lofts a Lawsuit
June Strunk lost her battle to contact her former Morgan Stanley clients last year after she joined another firm, but she’s fighting back with a lawsuit that accuses the wirehouse of retaliating against her for reporting behavior of former colleagues that she suspected was illegal or unethical.
Filing under the state of Connecticut’s corporate whistleblower statute, the former resident branch manager of Morgan Stanley’s Mystic, Conn., office argues that the firm undermined her authority by allowing brokers to shun her and work directly with her complex manager and that its human resources department told her to cope with the harassment.
Strunk and a partner on her team resigned in May 2016 to set up an office in Mystic for Janney Montgomery Scott, leading Morgan Stanley to sue the duo the day after they jumped by claiming they had taken data that violated internal inherited account agreements and the Protocol for Broker Recruiting. The firm prevailed in obtaining restraining orders in court and in Finra arbitration that prohibit them from calling former clients until April 2019.
In her suit filed Tuesday in Superior Court in the Judicial District of New London against the firm and the New London complex manager, David Swartz, Strunk detailed a host of alleged violations by brokers and sales associates under her jurisdiction. They range from questionable mutual fund A share exchanges for elderly clients to unsuitable IRA post-rollover strategies and a broker’s billing the firm for shipping his golf clubs to California.
As resident manager, Strunk believed “she was supposed [to] ‘Say Something’ if she ‘Saw Something,’” the suit says, and asserts that she did so from the time of her posting to the position in 2009 through Swartz’ appointment as complex head in early 2016. His arrival put her “in the crosshairs of an escalating harassment campaign” as advisors knew she did not have his protection, it asserts.
The Mystic branch was small but boasted a 30% profit margin, far above the 20-21% average across the firm’s branch network, but Strunk was nevertheless “forced to resign and, thus, constructively discharged from her position,” the complaint says.
It describes Morgan Stanley’s subsequent enforcement of her non-solicitation agreement at a time when it was still a member of the Broker Protocol (it pulled out last November) as retaliation.
“At Mrs. Strunk’s departure, Morgan Stanley/MSSB set out to strip her of her client accounts and to punish her for complaining of her fellow advisors’ misfeasance,” according to the complaint. “[T]he company undertook a campaign to disparage and defame Mrs. Strunk, in order to destroy her client goodwill and her business reputation.”
Strunk is seeking over $1 million representing compensatory damages, loss of employment benefits, emotional distress and attorneys’ fees and costs, according to her lawyer, Robert B. Mitchell of Mitchell & Sheahan in Stratford, Conn.
She also has asked the U.S. Occupational Safety and Health Administration to allow her to file a whistleblower claim under federal law, he said.
“We look forward to addressing these claims on their merits,” a Morgan Stanley spokeswoman wrote in an emailed statement, “but find it notable that Ms. Strunk filed her lawsuit only after her conduct in connection with her voluntary resignation from Morgan Stanley to join a competitor firm led to the issuance of a temporary restraining order against her by a federal court, a permanent injunction by a panel of FINRA arbitrators, and an ongoing arbitration in connection with her post-resignation conduct,”
Swartz did not return a call for comment.