Reasonable advisors can differ over whether Morgan Stanley’s recent dismissal of Amy Forte was fair comeuppance for her dalliance with a billionaire client whose account she allegedly churned. Her latest crusade may draw more unanimous support from the community.
The southern Florida ex-broker has gone public with an arbitration claim she’s pressing against the world’s biggest retail brokerage firm over millions of dollars of back-pay sitting in deferred accounts. Brokerage firms have been deferring greater portions of advisors’ cash-and-stock-based bonuses, creating legal claims when advisors bolt or are fired before their awards have vested.
Morgan Stanley’s leadership in the trend has at times triggered widespread broker resentment.
Forte told the Associated Press on Monday that the firm is making a “blatant grab” for her money and also is pursuing her for part of the large award it paid in March to settle churning and elder abuse allegations made by her client’s widow.
“It’s just not right,” Forte, a 16-year Morgan Stanley veteran and a former Barron’s “top broker,” told the news service. “I have been a loyal employee. I loved that company. I’ve done everything for them. When times were tough, I rallied the troops.”
The erstwhile brokerage star was fired only two days after Financial Industry Regulatory Authority arbitration panel ordered Forte, her branch manager and Morgan Stanley to pay $32.8 million plus legal fees to her late client’s estate. Morgan Stanley paid the entire amount.
Morgan Stanley “categorically rejects” Forte’s wrongful termination allegation and money claims, a firm spokeswoman said.
“Ms. Forte’s claims overlook the fact that she was already adjudicated as jointly liable for the award based on her conduct,” she said. “Despite this, Ms. Forte has failed to contribute anything to the amount awarded, and has also failed to repay substantial sums loaned to her in connection with her employment.”
Morgan Stanley officially discharged Forte for allegedly bending industry rules and company policy regarding trading discretion and failure to report numerous tax liens, according to her profile in the BrokerCheck database.
Forte’s lawyer, Robert Pearl, did not respond to a call for comment.
Plaintiff attorneys who specialize in cases against brokerage firms said Forte has a plausible claim on money owed.
“It’s money she earned,” said Ryan K. Bakhtiari, a lawyer in Beverly Hills, Calif., who is not involved in the Forte case. “If they’re saying we’re terminating you and keeping your money,…I think arbitrators would not like that result.”
Forte, whose son remains employed at Morgan Stanley’s Palm Harbor, Fla., office, said in the AP interview that her affair with her former client, Home Shopping Network cofounder Roy Speer, ceased in 2007, long before his mental health had declined and before the churning charges alleged by his estate.
She called her relationship with Speer “a very dear friendship” and, at one time, “more than that.”
Forte also alleged in her interview with the newswire that “many, many people” at Morgan Stanley knew of, and at least tacitly approved of, her relationship, and also said she would not have been fired if she were male.
Her suit also alleges that she had given control of trading in the Speer account to her teammate, Charles Lawrence, before the alleged churning occurred. Lawrence, who was not named in the client’s arbitration claim but who was fired along with Forte, did not return a call for comment.
He told AdvisorHub two weeks ago that he had simply been an order-taker on the account.
Forte’s 26-page claim accuses Morgan Stanley of destroying her reputation and of hypocrisy, according to a report in the Tampa Bay Times. Firm officials initially celebrated the fact that the Speer estate’s award was nowhere near the almost $400 million its lawyers sought.
“Privately and in some cases publicly,” according to the filing, “Morgan Stanley was exuberant about the result in the Speer arbitration.”