Ex-Morgan Stanley Broker Goes After Wirehouse Alleging Defamation
Wirehouse Morgan Stanley is facing another lawsuit from an aggrieved former broker, according to news reports.
David Bindelglass, who had been registered with the wirehouse from 2009 to 2017, accuses the company of wrongful termination and defamation via Form U-5, according to a lawsuit filed with Finra cited by InvestmentNews.
Morgan Stanley discharged Bindelglass last December following allegations he had acted on instructions from members of a client’s family who weren’t authorized to trade in the accounts and that he had accepted authorizations from two clients despite concerns about the clients’ mental fitness, according to BrokerCheck.
Bindelglass’s suit includes affidavits from the clients Morgan Stanley mentions in his employment separation disclosure, who contradict the wirehouse’s version of events, InvestmentNews writes.
Bindelglass, who’s now an independent contractor with Cantella & Co., alleges Morgan Stanley made it more difficult for him to gain employment again and then used his gap in work to convince his clients against moving their money away from Morgan Stanley, InvestmentNews writes.
The broker claims he was able to hold on to only $20 million of the $130 million he had managed at Morgan Stanley, while his income dropped from $300,000 from 2015 to 2017 to a projected $91,000 in 2018, according to the publication. The suit seeks $1.6 million in damages and expungement of Bindelglass’s record.
Scott Matasar, an attorney representing the broker, tells InvestmentNews Morgan Stanley is using Form U-5 “as a weapon.”
Morgan Stanley declined comment to the publication.
Morgan Stanley has been in the spotlight recently over allegations it uses Form U-5 as a weapon against departing brokers. Finra arbitration panels do occasionally rule in favor of brokers claiming defamation by the company, but the cost of fixing their reputation can be exorbitant to the broker. For example, Dave Cebert won an arbitration claim against Morgan Stanley in 2016, with the panel ordering the wirehouse to pay him $2.4 million over defamation allegations. But Cebert has spent close to $2 million on legal fees, according to recent reports.