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Morgan Stanley Claws Back $600k in Notes from Fired Florida Broker

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Date: 2021-06-11 18:33:45

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June 11, 2021
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Judge rules

Morgan Stanley Wealth Management was successful in its bid to reclaim roughly $600,000 in promissory notes, plus interest, from a Florida broker it fired in January for allegedly failing to confirm trades with clients, according to an arbitration award finalized this week.

A Financial Industry Regulatory Authority arbitrator ruled Thursday that Thomas James Hagan, a 36-year broker who had been with the wirehouse since 2015, must pay the principal balance of four “fully-executed” notes totaling $577,561.54, plus interest of $16,126.03, not including any additional interest accrued since May 27. He was also ordered to pay $7,882 in attorneys fees and other costs, according to the award.

Hagan had been terminated from Morgan Stanley following “allegations that he exercised discretion/failed to confirm all trades with clients,” according to a January 11 ‘disclosure’ on his BrokerCheck profile.

Hagan, who has not registered with another Finra member firm since his discharge from the wirehouse, could not be reached for comment. He did not respond to notices from Finra dispute resolution services or make an appearance in the arbitration proceedings and had no attorneys representing him in the matter, the award document said.

A spokesperson for Morgan Stanley, which had submitted its statement of claim on March 2, did not respond to a request for comment on the award or if Hagan has indicated he will pay.

The notes at issue date back to November 2015, when Hagan joined the firm, with the most recent executed in February 2017, according to the award document.

Hagan began his brokerage career in 1984 with A.G. Edwards, joined Merrill Lynch in 1987 for a 19-year stay, and left in 2006 for Wells Fargo Advisors. He then moved nine years later to Morgan Stanley, according to his BrokerCheck profile. 

Major brokerage firms, including Morgan Stanley, often pay top brokers signing bonuses structured as ‘forgivable’ loans that can be multiples of a brokers’ annual revenue, but they can require that brokers stay at the firm for upwards of a decade for the loans to be forgiven.

Morgan Stanley had $3.24 billion in employee loans outstanding as of the end of 2020, up 8.7% from $2.98 billion the year before, according to its 2021 annual report. The year-over-year balance increase was an indicator that the wirehouse has revived its hiring efforts for high-producing veteran brokers since stepping back from the fray in 2017, as it followed sequential declines from 2012 through 2019.

In another promissory note case in January, a former Morgan Stanley broker in Boca Raton was ordered to repay a $984,000 promissory note balance tied to his resignation in July 2020.

Original Source: https://www.advisorhub.com/morgan-stanley-claws-back-600k-in-notes-from-fired-florida-broker/