A former risk officer for Morgan Stanley Smith Barney LLC sued the firm over claims he was unfairly fired for reporting securities “flipping” by one of the firm’s wealth managers.
Clifford Jagodzinski alleged in a complaint filed today in federal court in New York that he was terminated in April after reporting the wealth manager’s questionable trading, which he claimed was “obviously designed to bilk investors” by driving up commissions.
Jagodzinski said his superiors at first praised him for reporting the trading, as well as pointing out other activities he thought were improper, then told him to halt his investigations. He was fired days after he said the trading should be disclosed to the Financial Industry Regulatory Authority, according to the complaint.
“This was the very archetype of unlawful retaliation,” according to the complaint.
Christine Pollak, a spokeswoman for Morgan Stanley, said in a phone interview that the company believes “the complaint is without merit” and will defend itself in the case.
Jagodzinski also claimed he had discovered improper trading by other employees, found that some financial advisers failed to register home offices as alternative work sites, and found that one adviser was abusing drugs.
The complaint, alleging violations of the Dodd-Frank whistle-blower statute, seeks reinstatement and at least $1 million in damages.
The case is Jagodzinski v. Morgan Stanley Smith Barney LLC, 12-cv-5891, U.S. District Court, Southern District of New York (Manhattan).