Morgan Stanley and Ami Forte Escalate Pay and Slander Battle
As in high-stake divorce cases, arbitration battles between brokers and their former firms over dollars and reputation can get very ugly.
In an arbitration filing aimed at allowing her to hold on to $2.3 million of “forgivable” loans, collect $1.9 million of deferred compensation and avoid contributing to a $38 million arbitration award, former Morgan Stanley broker Ami Forte names male executives who the firm fired for misconduct but who, unlike her, were allowed to keep their monetary benefits.
Morgan Stanley fired Forte in March after she, her branch manager and the brokerage firm were ordered to pay $33 million plus costs and lawyer fees to the estate of Home Shopping Network cofounder Roy Speer for unauthorized trading, churning and elder abuse. Speer has acknowledged that she had an affair with Speer.
In its counterclaim to the arbitration that Forte filed in August, Morgan Stanley accuses her of raising issues of “equity” because she has “little else in her arsenal” and “does not even pretend to have the law on her side” in her “brazen” refusal to pay a penny of the Speer award.
Forte’s arbitration claim accuses the firm of having “acted in a reprehensible and discriminatory manner…demonstrated by the treatment accorded Ami when compared to other Managing Directors or highly placed Morgan management personnel who have either been fired by the Firm or told to leave due to alleged sexual misconduct towards other Morgan employees in the chain of command.”
It adds that the former employees were allowed to say they left voluntarily with no untoward marks on termination notices that the firm filed with regulators.
Arbitration filings are not public, but those in the Forte case were attached to a lawsuit filed last month in federal court in Wyoming by a trust company that Morgan Stanley says Forte controls. The suit from the trust company, Vester Investments, seeks to unfreeze about $600,000 that Morgan Stanley is holding pending collection of Forte’s unpaid note balances.
Forte’s arbitration filing says the firm defamed, slandered and libeled her through the U5 termination notice that it sent to regulators. She is seeking to have it replaced with one saying she was terminated without cause.
Her claim asserts that “another Managing Director, a former complex manager named Craig Norton, and Al Calliendo, a former branch manager,” received one year’s salary as severance, earned bonuses, and vested and some unvested retirement income, “in stark contrast with how Ami has been mistreated.”
It also calls out Eric Benedict, Morgan Stanley’s former head of private wealth management unit for wealthy clients and a former coordinator of its capital markets business for retail brokerage clients. He was fired in 2015 after 16 years at Morgan Stanley due to ‘undue risk to the firm,’ according to Forte’s claim.
Benedict, now with BMO Capital Markets, and Norton, now manager of a Raymond James Financial branch in Atlanta, declined to comment. Calliendo could not be reached for comment.
“We have been aware of Ms. Forte’s allegations for some time, and we believe they are without merit,” a Morgan Stanley spokeswoman said when asked to comment on her various claims. “Morgan Stanley will defend itself with vigor in the arbitration.”
Forte has not made a sexual discrimination claim directly, but could do so in the future, one of her lawyers said.
Her complaint also singles out female executives Cynthia Ferencz, identified as head of Morgan’s Special Investigations Unit, and Allison Patton, now cohead of client litigation at the wealth management division, as having asked duplicitously. They offered moral and advisory support to her during the Speer arbitration claims against Forte and Morgan Stanley, but were working behind the scenes to set up a mechanism for firing her once a decision was final, the complaint says.
As part of its counterclaim, Morgan Stanley is seeking almost $897,000 from Forte for the cost of an outside lawyer at Gray Robinson that it hired to represent her in the Speer estate’s arbitration. (That demand and the firm’s request for Forte to contribute to the settlement are disingenuous given that Morgan Stanley was privately “and in some cases publicly….exuberant” that the Speer award fell short of the $475 million that Speer’s widow was seeking, Forte said in her claim.)
Forte, who produced $10 million of revenue in 2010, alleges that Bill McMahon, one of the firm’s two division directors, had told her she would not be fired as a result of the Speer arbitration. Her former complex manager Stan Carter, for his part, declared that she was “a great employee, that they loved her” and told her that a 2013 letter of reprimand was all she would have to endure, her claim said.
The reprimand called attention to Forte’s failure to report to the firm tax liens filed against her and gifts she received from Speer. The firm also cited the failure to report the liens as a reason for her dismissal on its U5 regulatory report.
“No Morgan Stanley employee or representative, including McMahon and Carter, ever made such a promise, nor would they have had authority to do so,” Morgan Stanley said in its counterclaim.
“It is beyond dispute that certain of Forte’s conduct, as described in the Speer arbitration, violated Morgan Stanley policy, inflicted reputational harm, and was the major cause of the award against her, her employer, and her supervisor for more than $38 million,” the firm’s counterclaim asserts. “Yet Forte, for her part, continues to disavow any responsibility whatsoever and expects to walk away with the riches she received from this relationship, leaving all responsibility to others.”