Sept 4 A federal judge upheld an $8 million arbitration ruling against Morgan Stanley in favor of a former energy trader who said he was improperly terminated after refusing to meet with New York law enforcement authorities.
Judge Thomas Griesa of the U.S. District Court for the Southern District of New York confirmed the 2013 arbitration award by a Financial Industry Regulatory Authority (FINRA) panel that requires two Morgan Stanley units to pay the trader, Amit Gupta, $8 million. Griesa's order, dated Tuesday, was posted to FINRA's website on Thursday.
The arbitration award effectively restored millions of dollars in deferred compensation that Gupta was forced to forfeit because of the termination.
A Morgan Stanley spokesman declined to comment. Gupta's lawyer could not be immediately reached for comment.
Judge Griesa ruled that it was not his role to second-guess the arbitrators' interpretation of employment contracts between Gupta and Morgan Stanley. Griesa also disagreed with Morgan Stanley's argument that the arbitrators had "manifestly disregarded the law."
Gupta filed the arbitration claim in 2011, seeking more than $14 million in damages from Morgan Stanley & Co Inc and Morgan Stanley Capital Group Inc.
Morgan Stanley terminated Gupta for cause in 2009 after he declined to attend a meeting with the district attorney of New York County in Manhattan during an investigation. The firm said his action violated its code of conduct, according to the 2013 arbitration ruling.
Authorities later closed the investigation, allegedly involving a "large trade," without bringing charges against Gupta. Other details about the alleged trade and investigation are unclear.
Two of the three arbitrators who heard the case found the firm's decision was "flawed," given Gupta's "many months" of cooperation with Morgan Stanley, as well as the Commodity Futures Trading Commission and Manhattan prosecutors, according to the arbitration ruling. A third arbitrator dissented, writing that Gupta disregarded the "clear terms" of his employment contract.
Arbitration rulings are typically binding. However, parties can ask courts to overturn them in rare circumstances, such as when arbitrators disregard the law. (Reporting by Suzanne Barlyn; Editing by Dan Grebler)