Arbitration Ruling Against Morgan Stanley Upheld by Court
Wednesday, September, 17, 2014
Financial services giant Morgan Stanley’s attempt to have an $8 million arbitration ruling overturned ended in failure as a federal judge confirmed the ruling, rejecting Morgan Stanley’s claim that the arbitrator had disregarded the law in the case. The ruling is considered to be a further step in cementing arbitration’s role as an alternative to litigation that can be enforced – and clearly can be enforced on both sides.
The case involved a trader employed by Morgan Stanley who was terminated in 2009 because he refused to meet with law enforcement officials at the request of the company. The company stated his refusal to cooperate with law enforcement was a violation of its code of conduct. His termination disqualified him for nearly $14 million in benefits and incentives. He sued Morgan Stanley in 2011 after officials closed the investigation without filing any charges.
The arbitration panel found that the trader had cooperated extensively with various investigative bodies, and that his refusal to meet with a single law enforcement body did not constitute cause for his termination. One of the three arbitration panelists disagreed and dissented from the decision.
The decision cements the fact that arbitration agreements, typically seen as favoring large corporations over individuals, will be binding for all involved no matter who appears to be the beneficiary of decisions. Morgan Stanley has not indicated if they will attempt any further legal maneuvering or if they will simply pay the award as ordered.