Morgan Stanley Sues Oregon Broker Fired More than Inherited Account Concern

August 2, 2021

Morgan Stanley Wealth Administration has questioned a federal court in Oregon to restrain a previous broker whom it fired in July as aspect of its long-working probe of miscoding of production figures on inherited accounts.

The wirehouse alleged that Robert S. Sevcik is now attempting to solicit former prospects to sign up for him at his new business, D.A. Davidson in Medford, in violation of the settlement he signed with a retired broker, James Maddux, in 2017, in accordance to a complaint submitted Friday in U.S. District Courtroom in Oregon.

Sevcik, who was terminated July 12 for having credit score for trades that should have been shared with Maddux, managed all around $160 million in assets that he experienced inherited as part of the Previous Advisor System and which produced $1 million in annual income, Morgan Stanley alleged.

It is the 2nd time Morgan Stanley has absent to courtroom to defend Maddux’s former accounts just after it two a long time back attempted–ultimately unsuccessfully–to handcuff one more previous member of Maddux’s 5-broker Cedar Ridge Team group, David Sayler, who left to be part of UBS.

Given that his registration with Davidson on July 26, Sevcik has been speaking to shoppers and explained to at the very least just one that he was the “‘fall guy’ in a regulatory investigation involving Morgan Stanley” in hard work to woo the consumer to Davidson, in accordance to the complaint. Sevcik’s responses also violated Fiscal Business Regulatory Authority guidelines by producing misleading statements to the general public, Morgan Stanley reported.

“Morgan Stanley believes that Defendant’s contacts with shoppers, such as his deceptive statements, will only grow exponentially, in an energy to solicit enterprise away from Morgan Stanley and even more deprive Mr. Maddux of his retirement revenue,” the firm argued in its grievance.

Morgan Stanley has filed a parallel declare with Finra for a long-lasting injunction and damages that will commence on an expedited foundation if the TRO bid is profitable.

Sevcik, who started out his profession at Morgan Stanley predecessor Smith Barney in 2008, according to BrokerCheck, could not promptly be arrived at for remark.

A spokeswoman for D.A. Davidson declined to remark citing plan not to examine personnel issues. The Wonderful Falls, Montana-based company has 760 brokers, in accordance to its web page.

“Morgan Stanley will choose ideal motion to make sure that departing staff comply with their legal obligations,” a spokeswoman for the wirehouse wrote in an electronic mail.

Former Morgan Stanley brokers are prohibited beneath the FAP from soliciting accounts for at least a calendar year, or for the period of the five-yr transition period of time, in accordance to the files.

“I thought I could belief Defendant but, unfortunately, my rely on was misplaced,” Maddux wrote in a declaration hooked up to the grievance from Sevcik. “Not only is Defendant attempting to divert consumers to a competitor in violation of his obligations, I have due to the fact found that, in my view, he stole [emphasis in original] tens of 1000’s of dollars from me.”

Maddux, who worked at Morgan Stanley for 24 of his 37-12 months profession, did not return a request for further comment. He claimed in an interview previous thirty day period prior to the restraining purchase was filed that the episode had shaken his trust in the retirement account program.

“It’s sweet, and a great software right until you really feel like you have no recourse,” he claimed.

Morgan Stanley’s lawsuit reported the miscoded trades amounted to “tens of thousands of dollars of retirement money.” A person common with the matter said it is compensating Maddux and other retired brokers for improperly coded trades.

Morgan Stanley has fired around a dozen brokers as element of the inherited account review. A 1st wave of terminations included far more than 10 in November, but compliance interviews and dismissals surface to be ongoing.

“It took yrs for Morgan Stanley to uncover Defendant’s incorrect carry out and when it did, and experienced accomplished its investigation, Morgan Stanley terminated Defendant’s employment,” the business claimed in the complaint.

Many other veterans who had been fired have been capable to uncover new homes, together with a California broker who earlier in July convinced the relaxation of his team to sign up for him at unbiased broker-vendor LPL Economical.