Morgan Stanley and six of its executives were sued by a former employee claiming they fraudulently obtained a $1.2m arbitration award against him by misleading an industry regulator and its arbitrators.
Bloomberg reports that Mark Mensack said he worked for Morgan Stanley from August 2008 to November 2009 before being forced out for questioning the legality of compensation received by the firm and some of its executives for retirement plan sales, according to a complaint filed in federal court in Camden, New Jersey.
When he tried to press a state-court whistle-blower suit, the firm sought Financial Industry Regulatory Authority arbitration and won its claim for money due under a note Mensack signed at the outset of his employment, according to Friday’s complaint. Morgan Stanley also won dismissal of a state-court case he had filed against it.
Mensack claims that in July 2012 he learned the firm had assigned the note to a different Morgan Stanley entity prior to the arbitration and had no right to pursue him over it.
Mensack sustained 'severe emotional and physical distress as well as economic damages', he said in the complaint.
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