Morgan Stanley Loses Another FINRA Fight Over Deferred Comp

What You Need to Know

Morgan Stanley must pay about $1.1 million to a pair of its former advisors who accused the firm of failing to pay deferred compensation.
The new order comes as the firm continues to seek court intervention after a string of arbitration panel losses.
Morgan Stanley asserts that its compensation arrangement is fair and transparent — and not to be viewed as a retirement plan subject to ERISA.

A FINRA arbitration panel has ordered Morgan Stanley to pay about $1.1 million to a pair of its former advisors in Dallas who accused the firm of failing to pay deferred compensation to which they were legally entitled under “anti-alienation” rules set by the Employee Retirement Income Security Act.

The new order comes as the firm continues to seek court intervention in an ongoing saga involving deferred compensation “clawback” litigation filed by dozens of its former advisors across the United States.

A copy of the new order shared by an attorney representing the advisors shows Morgan Stanley must pay former advisors Jeff Davis and William Swisher compensatory damages of $297,465 and $144,879, respectively, plus annualized interest at the rate of 9% from Jan. 1, 2015 through and including May 13, 2024.

In addition, the order shows, Morgan Stanley must pay Davis and Swisher $235,395 in attorneys’ fees, pursuant to ERISA and New York labor law. Finally, the firm is also required to pay the advisors $20,000 to cover additional costs, plus certain fees, resulting in a total penalty of approximately $1.1 million.