Ex-Morgan Stanley adviser claims firm fired him for running for office

'Misunderstanding' led to termination, arbitrators say; former adviser wins a $525,000 award

Jan 7, 2014 @ 12:15 pm

By Mason Braswell

Finra, Morgan Stanley, arbitration
+ Zoom

A former Morgan Stanley broker who claimed that he was unfairly terminated for running for a seat in the Illinois House of Representatives has been awarded $525,000 from a Finra arbitration panel.

Former financial adviser Vincent Romano, who was fired in May 2012, accused Morgan Stanley of unjust termination and claimed that the firm included a libelous mark on his employment record in order to weaken his campaign.

The firm was concerned that his election in the 16th District, which includes a number of Chicago suburbs, could upset the balance of power in the Illinois House and interfere with business that the firm had with the state government, he said.

“[Morgan Stanley] feared a loss of business with the city of Chicago and the state of Illinois because [Morgan Stanley Smith Barney] has a relationship with House Speaker Michael Madigan, and Romano was running on a reform platform that could upset Michael Madigan's political power,” Mr. Romano argued, according to the award.

Mr. Romano, who had been at the firm for about eight years, lost his election in November 2012 to the incumbent deputy majority leader, Lou Lang.

Mr. Romano was fired for violating rules regarding outside business activities, Morgan Stanley said.

There were “concerns about [the] financial adviser running for elected political office, despite not having received prior firm approval for same, as required by firm policy,” the firm wrote on his U5, which is publicly available through the Financial Industry Regulatory Authority Inc.'s BrokerCheck database.

But Mr. Romano said that he was initially given permission to campaign in March and that it made “no sense” why the firm came back in May and accused him of violating the rules.

He requested $2 million in compensatory damages and $6 million in punitive damages.

Mr. Romano said that he was looking to recover losses from his campaign and from having to leave the family business.

His brother and former partner, Rick Romano, is still an adviser at Morgan Stanley.

Vincent Romano left the advice industry and is working on a business venture in firearms manufacturing. He plans to run for election again in 2014.

In the end, the arbitration panel awarded $475,000 in compensatory damages and $50,000 in punitive damages.

It also ordered that the language on Mr. Romano's termination form be altered to read that he was fired because of “concerns about the financial adviser running for elected political office, despite not having received prior firm approval for same, due to a misunderstanding between the firm and the financial adviser. The terminated employee violated no investment-related statutes, regulations or rules."

Mr. Romano said that he would have liked the award to have been more substantial, but he applauded the panel's decision to award punitive damages, though he characterized the amount as a “slap on the wrist.”

Morgan Stanley said that it regretted the award and denied any wrongdoing, pointing to the arbitrators' characterization of the disagreement as a “misunderstanding.”

“Morgan Stanley is disappointed with the arbitration panel's award,” a spokeswoman for the firm, Christine Jockle, wrote in an e-mail. “The revised U5 language suggested by the panel reflects their conclusion that Mr. Romano was terminated due to a 'misunderstanding' as to whether he had received the necessary prior approval to run for office without taking a leave of absence and not on account of any unlawful business or political motive.”

A spokesman for Mr. Madigan, Steve Brown, said that he had no comment, as he was unaware of the case or of any relationship with Morgan Stanley.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Oct 11

Conference

Fall Excell—Peak Advisor Alliance

The InvestmentNews Research team will present exclusive data and highlights from its bellwether benchmarking study that will identify best practices for setting and structuring compensation and benefits packages throughout your organization.... Learn more

Featured video

Consuelo Mack WealthTrack

Thomas Russo: What it really takes to be a successful investor

Being a successful investor requires the ability to say no and the capacity to suffer, according to Thomas Russo, managing member of Gardner Russo & Gardner.

Video Spotlight

Are Your Clients Prepared For Market Downturns?

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

HighTower faces pressure to let investors cash out

After an IPO planned for last year didn't happen, the company could opt to satisfy its backers with a sale.

Envestnet to buy FolioDynamix

The deal, which is expected to close in the first quarter of 2018, will bring the total assets Envestnet works with to almost $2 trillion.

10 best financial adviser jokes

How many financial advisers does it take to screw in a lightbulb?

With margins crashing, broker-dealers look to merge: report

Increased regulation is straining profit margins among broker-dealers, sending many of them into the arms of their bigger brethren.

Hackers may have profited from SEC breach

The hack of the agency's Edgar filing system occurred in 2016, but the regulator didn't conclude until last month that the cybercriminals may have used their bounty to make illicit trades.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print