Ex-Morgan Stanley Broker to Pay $1.4 Million After Epic 7-Year Arbitration War
A former Morgan Stanley broker in Philadelphia who fought promissory note and damage claims from the firm and his former branch manager for seven years, must return $1.4 million to the firm, according to a Financial Industry Regulatory arbitration panel.
Stephen Todd Walker, who left the firm in 2010 with a balance of $1.67 million on promissory notes tied to bonuses from the firm, was ordered to pay that amount plus $301,000 of attorneys’ fees and compensatory damages. However, the three-person panel granted him $525,000 in compensatory damages from Morgan Stanley.
Walker, who joined Oppenheimer & Co.’s Philadelphia office after his eight-year stint at Morgan Stanley and since 2015 has been with RBC Capital Markets, found the battle “extremely distracting” to his continuing business as a broker but considers the decision a “win,” said his lawyer, Gary Green.
“It was a herculean task on his part,” Green said. “It took me 71 days of trial and numerous fights to try to get discovery and over a million pages of documents, all to establish that the reason that he was terminated was baloney.”
Green, a partner at Sidkoff, Pincus & Green in Philadelphia, took the case on a contingency basis but estimated that hourly legal costs for Walker would have totaled over $4 million.
The arbitrators’ decision on November 1 culminated a seven-year battle that consolidated three separate claims and counterclaims among Morgan Stanley, Oppenheimer, Walker and Morgan Stanley branch manager Daniel Thompson. The 160 pre-hearing and hearing sessions between 2011 and September of this year alone left Morgan Stanley and Walker with a bill of more than $191,000, 60% of which was assessed against the firm and its promissory note holdings affiliate.
“This one certainly has to be among the grandfathers in terms of age,” said Bill Singer, a New York plaintiff’s lawyer who blogs about arbitration awards and was not involved in the cases. “It’s one hell of an ordeal.”
Walker responded to Morgan Stanley’s initial September 2010 breach of promissory note claims with a May 2011 counterclaim seeking over $52 million in compensatory and punitive damages for “tortious interference” with his client relationships, unfair competition, improper conversion of property and defamation.
Walker was dismissed after a series of disputes with managers, ranging from his desire to move to another branch to the firm’s claim that he miscalculated the hours his interns worked, according to Green. Walker was a Chairman’s Club-level producer at Morgan Stanley and left behind “thousands” of business cards and files that were his personal property, the lawyer said.
The arbitrators, who denied his request for $35 million in punitive damages as well as Morgan Stanley Smith Barney Holdings’ bid for $1.1 million on attorneys’ fees, did not provide an explanation for their decisions. Morgan Stanley dropped its claims against Oppenheimer in October 2012.
Thompson, the Morgan Stanley branch manager, sought $500,000 in punitive damages and $250,000 in compensatory damages from Walker. The arbitration panel ordered Walker to pay the manager $10,000.
The panel denied Walker’s request for expungement of some of his U-4 and U-5 records in the Central Registration Depository. His BrokerCheck history discloses two settled customer disputes in 2010 and 2001 and a pending dispute, but no record of separations from any of his employers.
A spokeswoman for Morgan Stanley did not immediately return a request for comment.