Ex-MS Broker Wins $365,000 to Offset Promissory Note Repayment
Claimants: Beverly B. Carroll
Respondent: Morgan Stanley Smith Barney LLC, Morgan Stanley Smith Barney FA Notes Holdings LLC
Nature of Dispute: Associated Person vs. Member and Non-Member
Overview of Allegations: From October 2009 to April 2014, Carroll was registered as a broker with Morgan Stanley. This claim is related to Morgan Stanley’s initial $406,134 claim against her for breach of promissory note, which was awarded in Morgan Stanley’s favor on January 23, 2017. Carroll denied these allegations but was rejected from counterclaiming due to a clause in her promissory note agreement to waive that right.
In response, Carroll filed a new claim in arbitration alleging Morgan Stanley did not pay her the full $200,000 per year as promised when she was hired, did not pay her commissions from revenue she split with a partner who left the firm, and paid her at a lower payout rate than agreed upon in 2014.
Damages Requested: Claimant requested total compensatory damages in the amount of $425,317, including $321,560, which is the total difference between what she was paid annually for three years and the $200,000 salary she was promised when she was initially hired. She also requested $103,957 in unpaid split commissions with a partner who left the firm, and an additional $9,000 in unpaid commissions after her payout had increased from 25% to 35% from January 1, 2014 until April 23, 2014 when Carroll left the firm.
Result: An arbitration panel determined that Morgan Stanley is liable for $365,000 in compensatory damages.