Ex-Morgan Stanley Broker Loses Bid to Nullify $2.6 Mln Note Balance
A former Morgan Stanley broker’s attempt to gain the upper hand in a promissory note dispute by suing the firm for wrongful termination based on age discrimination and other claims has ended with his being ordered to repay the firm nearly $2.6 million.
Ivan Gefen, who joined Morgan Stanley’s Boca Raton branch in January 2013 and left a little more than three years later, filed his wrongful termination claim for at least $5 million in compensatory damages and back pay in September 2016, drawing a counterclaim from the firm for the balance and interest on three promissory notes he had signed, according to a Financial Industry Regulatory Authority arbitration award finalized on Friday.
The amount reflects the entirety of what Morgan Stanley had sought, according to the award document. The three arbitrators also instructed Gefen to pay the firm’s counterclaim attorneys’ fees, which an outside court will determine.
“We thought we would come out a lot better than we did,” Gefen, a 34-year industry veteran who is now an independent broker with Newbridge Securities Corp., said in a brief interview. “We’re certainly upset with the outcome.”
The arbitrators, who as is customary did not provide an explanation for their decision, denied Gefen’s claims in their entirety, including his argument that the promissory notes should be deemed “fully satisfied,” according to the award. They also rejected his request for expungement of the Form U5 termination filing that Morgan Stanley made with regulators.
His initial complaint argued that the firm’s breaches of his employment contracts “excused” his having to repay the promissory notes.
“Morgan Stanley expects departing employees to repay loan obligations to the firm and will take appropriate action to ensure that they do,” said spokeswoman Christine Jockle.
Gefen’s lawyer, Joseph M. Pastore III, did not return a call for comment as to whether his client has any reason to try to have the award vacated in court. Gefen said he was still evaluating that possibility.
Gefen based his breach-of-contract claim on allegations of age discrimination, intentional infliction of emotional distress, and fraudulent inducement. He subsequently withdrew the age discrimination argument because he had not reached an agreement with Morgan Stanley about whether the claim can be made under Finra’s dispute resolution rules, according to the award notice.
Gefen’s BrokerCheck record includes ten customer complaints, eight prior to his joining Morgan Stanley and two that were filed since he joined. One seeking $1.5 million for unsuitable investment recommendations settled in May 2018 for $295,000 and a second alleging unauthorized trading was settled earlier for $10,000. Half of the eight earlier complaints were denied or closed without action and the others were settled, according to BrokerCheck.
Morgan Stanley hired Gefen in January 2013 from National Securities Corporation. He began his brokerage career with a two-and-a-half-year stint at First Miami Securities in 1984, spent more than 12 years at Prudential Securities and worked for almost 13 years at National and predecessor firms.