Morgan Stanley Client Claims $929K of Apple Option Losses, Gets $80K
A client who sued Morgan Stanley and his Birmingham, Alabama-based broker after allegedly losing almost $1 million on Apple call options was awarded a sliver of his claim by a Finra arbitration panel, but the firm and broker lost their bid for expungement of the claim from the broker’s records.
In an unusual twist, more than half of the $79,730 that the three public arbitrators granted the customer represented punitive damages awarded under Alabama state law, according to a January 8 decision posted on Finra’s dispute resolution website on Tuesday.
The broker, David Searcy, who has been with Morgan Stanley for almost five years and in the industry since 1992, said he could not comment on the decision.
Glenn Waldrop Jr., a Birmingham lawyer who represented clients William Jones and his wife, Elizabeth Ratliff, declined to comment about specifics of the case without authorization from clients, but applauded the punitive damages of $48,401 they were awarded.
The couple, who had asked for $929,188 in compensatory damages, withdrew Ratliff’s claims five months after filing their case in December 2016.
“It’s unusual in my experience,” Waldrop said of the damages award. “That only happens in the most extreme cases where the panel is attempting to send some sort of message both about the individual broker and the broker-dealer.”
A Morgan Stanley spokeswoman said she could not immediately comment on the damages or how the firm evaluates the entire award.
As is customary, the arbitration panel did not explain its reasoning, but pointed out in the award’s “other issues considered and decided” section that Jones alleged losing “approximately $2.7 million and Ratliff lost an additional $200,000.” It awarded $30,968.50 of compensatory damages.
The claimed losses represented, in part, opportunity costs, or “lost earnings” that the couple could have earned if the money “had been properly invested,” according to the relief they requested.
The panel, which conducted 19 hearings from September to December of 2017 and heard valuations of the case from expert witnesses, dismissed Jones’s claims against Morgan Stanley for negligent hiring and breach of contract, according to the decision. It also rejected his request for attorneys’ fees.
Searcy began his career at Amsouth Investment Services in August 1992, according to BrokerCheck. He moved to Merrill Lynch in September 1999 and “voluntarily resigned” in February 2013 amid an internal review to investigate allegations that he was “soliciting a client to purchase certain CDOs and to participate in a real estate investment outside the firm,” according to his BrokerCHeck history.