Ex-Morgan Stanley Broker Seeks to Vacate $2.9-Mln Award in Non-Solicit Case
A broker who was briefly employed by Morgan Stanley is seeking to vacate part of a $13 million arbitration award ordering him and a one-time partner to pay $2.88 million combined.
The complaint, filed in federal court by Christopher R. Armstrong, adds another chapter to a long-running litigation saga tied to Morgan Stanley’s botched hiring of the duo in 2019 from Charles Schwab Corp.
Armstrong is arguing that an arbitration panel’s decision in November confirming that he was jointly liable for damages “manifestly disregarded” state law. Florida and New Jersey, where Armstrong and his ex-partner worked, prevent a party found guilty of wrongdoing from seeking to have others found jointly liable contribute to damages, according to Armstrong’s complaint.
Morgan Stanley, Armstrong and his former partner were ordered in March 2023 to pay a combined $4.32 million to Schwab. Morgan Stanley fronted the full amount to Schwab, but the duo shirked their obligation to pay their share, the wirehouse said. It obtained both a court and the November arbitration award holding the brokers liable for their two thirds.
A Morgan Stanley spokesperson said in a statement: “The Panel properly adjudicated Mr. Armstrong’s liability resulting from his conduct and his motion to vacate that outcome is without merit.”
Armstrong’s partner, Randall B. Kiefner, is incarcerated at the Central Florida Reception Center in Orlando on child pornography charges. He is scheduled for release in 2030, according to the Florida Department of Corrections.
Armstrong and Kiefner had worked for Morgan Stanley only briefly, from March to April in 2019, after leaving Schwab.
Following their move, Schwab initiated the legal battle by filing arbitration claims against Morgan Stanley, alleging it had engaged in “predatory” recruiting tactics. Schwab also included claims against Armstrong and Kiefner, alleging they had violated their employment contracts and taken client contact information.
Morgan Stanley fired Armstrong and Kiefner saying they say they failed “to meet the Firm’s expectations regarding professional conduct and adherence to the Firm’s policy governing the transition of Financial Advisors to Morgan Stanley.” The two claimed the termination was defamatory.
In February 2023, a panel of arbitrators held Morgan Stanley and the two broker jointly liable for $4.3 million in damages to Schwab, and ordered the wirehouse to pay $3.03 million in punitive damages to Schwab and $4.7 million in damages and attorney fees to Kiefner and Armstrong based on their counterclaims alleging defamation. That same panel had also partially vindicated Kiefner and Armstrong, who had managed a $750 million book at Schwab, by calling for Morgan Stanley to expunge “defamatory” U5 filings from their records.
