Morgan Stanley to Pay $800k to NFL, NBA Stars Thanks to ‘Bada Bing’ Broker
(Corrects final paragraph to say that Asante Samuel’s suit is against Wells Fargo, not Parthemer, and that other athletes may still bring complaints.)
An arbitration panel ordered Morgan Stanley to pay $819,300 to two former professional athletes who claimed their advisor placed them unto unsuitable, risky outside investments, including a Miami nightclub that the advisor operated.
The clients, former NBA point guard Keyon Dooling and NFL offensive tackle John St. Clair, argued that Morgan Stanley failed to properly supervise Miami broker, Aaron Parthemer, according to an arbitration award published on Tuesday by the Financial Industry Regulatory Authority.
Parthemer, who was barred for life from the securities industry last year for failing to gain approval for his outside business activities and taking loans from clients, recommended that the athletes invest in his Club Play nightclub and another business, according to Curtis Carlson, the lawyer who represented them in the Financial Industry Regulatory Authority arbitration hearings.
Club Play and Global Village Concerns, a new business founded by a friend of Parthemer aimed at school fundraising, both went bankrupt.
In a sign of their success, the athletes received most of the $900,000 in damages they sought, according to the award. The arbitration was brought against Morgan Stanley and not Parthemer directly because the broker filed for bankruptcy in November, Carlson said.
“[W]e are disappointed in, and disagree with, the arbitrators’ decision in this case,” a Morgan Stanley spokeswoman wrote in an email
Parthemer jumped to Wells Fargo Advisors from Morgan Stanley in 2011, where he remained until his bar by Finra last year. Wells has filed its own arbitration claim seeking reimbursement of $2.1 million in bonuses from the broker.
James Sallah, whose law firm represents Parthemer, declined to comment on the Morgan Stanley decision and what effect it might have on the Wells case.
Parthemer’s undisclosed involvement in the nightclub “could not have been a secret” to Morgan Stanley, the athletes argued in their complaint, which was filed in May 2015.
He celebrated a birthday there, married a club employee and would often conduct his brokerage business remotely from the nightclub and log on to Morgan Stanley’s computer system from there, according to the complaint.
He also encouraged prospects and clients to stay invested, and passed on an opportunity to sell the club in 2010 at a price that would have been profitable to all investors. Parthemer “had no idea what he was doing” and advised clients to “hold on, as this is gonna be huge!!,” according to the complaint.
The former broker also sent multiple emails about the outside business to his Morgan Stanley partner on company email systems, the complaint said, noting that the nightclub was a prospecting tool that gave Parthemer access to “top athletes, rappers, actors, comedians, singers, and other entertainers.”
Asante Samuel, a former NFL cornerback, has filed a separate arbitration complaint that names Wells Fargo and is set for hearings later this year, Carlson said. Revising an earlier statement, Carlson added that other athletes may come forward with complaints.