Ex-Morgan Stanley Brokers Strike Out with $40 Mln Arbitration Claim
Morgan Stanley has triumphed over a pair of brokers who claimed the company owed them almost $40 million in commissions and other compensation collected in part by mega-broker Roger Coleman, their former boss.
A Finra arbitration panel earlier this month denied all the claims sought by Brian Melbourne and Brian Shepherd after they left Morgan Stanley in 2013 to join a Credit Suisse private banking brokerage office in New York City.
The case gained notoriety because of the unexpected departure of Coleman in January. Coleman, who specialized in managing stock awards for corporate executives, was a frequent Top 10 advisor in Barron’s polls, where he was most recently credited with $27 billion of client assets under management.
In their arbitration complaint, Shepherd and Melbourne alleged that Morgan Stanley improperly withheld $4.9 million in “illegally seized commissions” that belonged to them because they had terminated their partnership agreement with Coleman’s team before they resigned.
The two Brians sought a total of $39 million in compensatory damages, including $14.6 million lost to “unfair competition,” the $4.9 million of commissions, $2.5 million for “working in a hostile environment” and $5 million for “threat of physical harm” to Melbourne. Their complaint initially sought close to $32 million.
The three-person arbitration panel did not explain their reasons for dismissing all the claims, as is typical in Finra award decisions. Morgan Stanley, which had gone to court in 2013 to prevent the brokers from soliciting their former clients, “is pleased with the result” of the arbitration, a company spokeswoman said.
The decision, which was dated March 4 but not previously reported, was “very shocking,” said Kevin Hoffman, the brokers’ lawyer.
Shepherd in February left Credit Suisse, which is shuttering its U.S. brokerage operations as part of a corporate restructuring. He now works at Wells Fargo Advisors, according to Hoffman and the broker’s registration history on BrokerCheck.
Melbourne remains at Credit Suisse, but will move soon to Wells Fargo, according to a person answering his office phone. He did not return a request for comment.
Morgan Stanley, meanwhile, continues to be at loggerheads with members of Coleman’s former team over how they and the firm split production credits.