| Sept 4
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
Authorities later closed the investigation, allegedly
involving a "large trade," without bringing charges against
Gupta. Other details about the alleged trade and investigation
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
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)