Morgan Stanley Sues Broker for Holding Out on $1.9 Mln Arb Award
The messy divorce between Morgan Stanley and Pennsylvania broker Stephen Todd Walker has turned uglier with a new court filing by the firm seeking to compel the broker to pay a $1.97 million arbitration award.
An arbitration panel last month ordered Walker after a seven-year battle to pay the balance on two promissory notes, plus the firm’s lawyers’ fees, while Morgan Stanley was separately ordered to pay the broker $510,000.
On Friday, Morgan Stanley filed a petition asking a federal court in Philadelphia to compel Walker to pay the money he owes the firm plus $10,000 that the arbitration panel ordered him to pay to his former manager.
“Walker has not paid any portion of the over $1.9 million that he was ordered to pay, and has not made a motion to vacate the Award,” Morgan Stanley wrote. The firm said it sent its check for the full $510,000 on December 1 to Walker’s lawyer to resolve the broker’s claims of defamation, unfair competition and “tortious interference.”
Morgan Stanley’s payment complied with Finra arbitration rules requiring awards to be paid within 30 days of a ruling, it wrote in the petition filed in U.S. District Court for the Eastern District of Pennsylvania.
Gary Green, a partner at Sidkoff, Pincus & Green in Philadelphia who represented Walker, did not immediately return a call for comment on why his client has not paid the award.
Securities lawyers said the case was also unusual because the arbitration panel did not offset the smaller amount Morgan Stanley was ordered to pay against the $1.9 million Walker owes the firm. Instead, it offset a second award of $15,000 the broker was ordered to pay against its initial award of $525,000 from the firm to Walker.
Bill Singer, a securities lawyer who writes a blog about Finra arbitrations, said the “painstakingly” calculated awards ensured that Walker would get a check even if the broker tried to avoid paying his award through a bankruptcy or other filing.
Walker, who left Morgan Stanley in 2010 for Oppenheimer & Co. and is now with RBC Capital Markets, could not be reached for comment.