Annapolis Grad Ordered to Pay Morgan Stanley $300K in Note-Case Loss
(Corrects home office location of Klyce’s lawyer in fifth paragraph.)
A San Francisco broker who was sued by Morgan Stanley for the almost $300,000 balance on his forgivable loan following his departure from the firm after 16 months lost his counterclaim for up to $9 million and was ordered by an arbitration panel to pay more than Morgan Stanley sought.
Harvey R. Klyce, an Annapolis graduate whose counterclaim cited discrimination and violation of federal and state military leave laws in relation to his service in the Naval Reserve, must pay Morgan Stanley $323,353 plus $175,000 of its attorneys’ fees, according to a judgment published Wednesday on the Financial Industry Regulatory Authority’s arbitration award website.
The firm had asked for $286,001 of the balance on Klyce’s forgivable loan.
The three-person arbitration panel in San Francisco did not explain its reasoning but wrote that it dismissed Klyce’s counterclaim in its entirety, “including his statutory discrimination claim.”
“We’re very disappointed,” said Michael Valenti, the Louisville-based lawyer who represented Klyce.
Both parties had asked the arbitrators for an “explained decision,” he said, and Klyce has written Finra to discover more about why it was not provided before he decides whether to proceed with an appeal.
Klyce, who first registered with Finra in the summer of 2011 with J.P. Morgan Securities, argued in his counterclaim that he was “lured away” to Morgan Stanley’s private banking group in May 2013. He asserted violations of the Uniformed Services Employment and Reemployment Rights Act and of California military leave laws, according to the award.
Due to his service as an officer in the Naval Reserve, he asked for extra time to meet certain production “gates,” Valenti said. Morgan Stanley officials testified they would have retroactively permitted such extensions if Klyce had subsequently met targets, he noted.
Klyce’s major issue, which prompted his claim of up to $9 million of economic damages, was that he was never allowed to work with wealthy contacts in the Middle East, the lawyer said. Those contacts were built over the broker’s five years of experience as an information tech executive and private-equity fundraiser in Dubai and Abu Dhabi, but he testified that he was prevented from selling them Morgan Stanley services by turf-protecting brokers in the Mideast and London, according to Valenti.
The lawyer said that the requested economic damages his client sought were based on an earnings potential spreadsheet provided him by one of the two California branch managers who were competing to recruit the relatively inexperienced broker from JPMorgan.
Klyce, who joined Credit Suisse Securities after leaving Morgan Stanley and is now with Wells Fargo Advisors in San Francisco, also asked arbitrators to approve converting his promissory note to a bonus with taxes paid by Morgan Stanley.
Valentin won a celebrated promissory note arbitration victory for a former Morgan Stanley broker last year in which the firm was ordered to pay the broker some $300,000 after suing to collect that much.
Klyce graduate from the U.S. Naval Academy in 1990 with a degree in economics and is a naval reserve staff officer, in future operations, within the U.S. Pacific Fleet, according to a social media profile.