According to Reuters, Morgan Stanley Smith Barney hired a team of brokers led by William Claridge and Patrick Lewis last summer, to join its Billings, Montana, office. The team had generated more than $1.4 million in fees and commissions from clients with $215 million in assets during the previous year. Merrill accused Morgan Stanley of raiding and unfair competition and said the brokers were guilty of breach of contract and breach of fiduciary duty. Morgan Stanley denied the claims, according to the Reuters report.
On Tuesday, arbitrators with the Financial Industry Regulatory Authority (FINRA) ruled that Merrill did not have a case against the brokers and that Morgan Stanley was solely liable. Morgan Stanley was told to pay Merrill $552,875 in compensatory damages, $400,000 in punitive damages and about $16,000 in fees, reports Reuters.
A Morgan Stanley spokesperson told Reuters the company disagrees with the penalty; Merrill Lynch has not issued a statement. Claridge had worked at Merrill for more than 22 years, while Lewis spent more than 13 years at the brokerage, a unit of Bank of America Corp.