| NEW YORK
NEW YORK Feb 22 A former Morgan Stanley
broker who tried to blow the whistle on what he called unethical
sales practices, and was later ordered to pay $1.2 million
following his departure, is seeking his day in federal court.
Mark Mensack filed a lawsuit against Morgan Stanley and Wall
Street's top watchdog in a New Jersey federal district court on
Friday, accusing the firm of perjury, among other claims.
Mensack also found fault with the industry's arbitration hearing
process that resulted in the award against him.
"That needs to be brought to light," Mensack said in an
interview on Friday, referring to his claim that Morgan Stanley
committed perjury. Mensack said his attorney proved that key
evidence was fabricated against him during the hearing.
When Mensack sought to review the testimony of the
arbitration hearing in hopes of vacating the award, he found
that roughly eight hours of the testimony were "destroyed, never
recorded or were otherwise missing and unavailable."
"It's an indication of injustice in the system," said
Mensack, who is now seeking a trial by jury.
The lawsuit follows a Financial Industry Regulatory
Authority panel decision from August 2011 in which the
arbitrators ruled in favor of Morgan Stanley and said that
Mensack failed to repay money owed on a sign-on bonus after he
left the firm.
A FINRA spokeswoman declined to comment.
Mensack, who worked for Morgan Stanley from August 2008 to
November 2009, said he was forced to leave the firm after he
discovered an illegal "pay-to-play" scheme involving 401(k)
assets that the company administered. He filed a whistleblower
suit against the firm in March 2010 in New Jersey Superior
Morgan Stanley one month later filed a "breach of contract"
arbitration claim against Mensack, which resulted in the $1.2
In the 31-page complaint, which included 16 counts and a
jury demand, Mensack stated a lengthy list of accusations
against Morgan Stanley and FINRA, from ethical violations to
Mensack, who was forced to file for bankruptcy, said he
suffered "severe emotional and physical distress," as well as
financial damage, including the $1.2 million award against him
and "extensive" attorneys fees and costs during the proceedings.
Morgan Stanley called Mensack's claims "baseless" and said
in a statement that he "had a full opportunity to present (the
claims), represented by counsel, in an extensive hearing."
"The arbitration panel gave them fair consideration and
rejected them in their entirety," the company said in an emailed
statement on Friday. "They correctly concluded that his claims
did not excuse his loan obligation, and ordered Mr. Mensack to
re-pay it, along with Morgan Stanley's attorneys' fees."