Former Morgan Stanley Employees File Suit Alleging Violations of the SEC Whistleblower Protections

Couple launches $20 million retaliatory-firing suit against the firm

A husband and wife who were formerly employed by Morgan Stanley launched a $20 million suit against the firm Monday, alleging that it violated whistleblower protection laws by terminating their employment after they made complaints to supervisors about unfair practices occurring at the firm.

Jaime Feldman-Boland and James Boland filed the suit in New York federal court after both were fired in August and October 2011, respectively, due to what the firm considered “poor performance,” according to the complaint.

A report on Law 360 states that Feldman and Boland filed complaints with the Securities and Exchange Commission in July 2011, alleging that they had witnessed fraudulent activity taking place at their New York office. Among the accusations they made are those of unlicensed brokers using false broker credentials.

According to the complaint, Michael Silverstein, a Morgan Stanley adviser who allegedly took credit for a $200 million opportunity for the firm that Feldman was responsible for, “verbally assaulted” her and allegedly threatened her with a choking gesture when she corrected his account of the situation. Later, according to the complaint, the firm turned down the opportunity, which Feldman felt was in retaliation toward her.

In late July, Morgan Stanley told Feldman that the incident had been investigated and that while it was “unprofessional” on the other’s behalf, it was not grounds for termination, according to the complaint. The firm offered her a transfer to another branch, which she and Boland decided to accept. Days before, they had both filed complaints with the SEC Whistleblower website.

In early August, the couple met with FINRA representatives to launch an investigation into the fraudulent activities they had witnessed at the firm. FINRA proceeded to audit the branch, according to the complaint, and William Schwartz, a branch risk officer, allegedly instructed brokers to lie on their questionnaires.

In August, Feldman and Boland were credited with a new $1.8 million account for the firm, which, according to the complaint, stood to bring in a $50,000 commission. The next day, Feldman was terminated for performance. According to the complaint, the termination and the alleged verbal abuse she suffered may have contributed to Feldman’s diagnosis of post-traumatic stress disorder.

Boland was granted two weeks of medical leave to care for Feldman, and upon returning in late November, he was terminated, also due to alleged performance issues. Both employees’ questionable terminations led them to file suit against the firm for violating the whistleblower protections guaranteed by the Dodd-Frank Act and the Sarbanes-Oxley Act, as they believe the firings correlate directly to their reports to the SEC.

The courage of whistleblowers to report fraud and misconduct is a vital public service. Because they assume great risk, aggressive and skilled attorneys are required to guide them through what can be a high-stake case against a formidable opponent. Our attorneys attempt to ensure that whistleblowers are fully eligible to obtain the benefits to which they are entitled under the law, including monetary rewards.

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