Feb 27 An arbitration panel denied Morgan
Stanley Smith Barney's request to claw back compensation from
two brokers and, instead, awarded the brokers about $1.5
Morgan Stanley's wealth management unit had asked the
Financial Industry Regulatory Authority (FINRA) arbitration
panel to make Jorge Antonia Carreras and Carlos Javier Molina
repay funds paid to them under a promissory note agreement.
The brokers filed a counterclaim alleging the firm breached
contracts related to commissions and bonuses and for negligent
When the brokers were recruited to Morgan Stanley from
Merrill Lynch, a significant part of the pitch was that they
would be able to manage assets from their high-net-worth Latin
and South American clients on Morgan Stanley's Swiss platform,
said the brokers' lawyer Jacob Buchdahl, partner with Susman
Godfrey LLP in New York.
The bank later decided to stop its New York brokers from
using the Swiss platform, which caused "tremendous problems" for
the brokers, Buchdahl said.
The panel concurred with the brokers and said that Morgan
Stanley changed the work environment surrounding the Swiss
platform and caused the brokers a significant loss in
The panel awarded Carreras $655,786 in compensatory damages.
Molina was awarded $834,637.
The two brokers have since then moved to Barclays.
A Morgan Stanley spokeswoman declined to comment.