Securities Law Blog

On April 6, 2010 a securities arbitration panel ordered a former Morgan Stanley & Co. broker to pay the firm $1.6 million to resolve a case involving his signing bonus.

When Thomas G. Hicks III joined Morgan Stanley in 2006, he received his signing bonus in the form of loans secured by three separate promissory notes.

The bonuses, handed out to attract brokers to join a firm, come in the form of a loan that is forgiven in annual installments until completely forgiven. Since the loans are secured by promissory notes, if a broker leaves, before the repayment term is over, the broker is required to repay the remaining balance.

Morgan Stanley filed a case against Hicks back in 2008 alleging a breach of the three promissory notes for the signing bonus. According to the Financial Industry Regulatory Authority (FINRA), Hicks left the firm in the fall of 2007, less than two years after joining. FINRA ordered Hicks to pay his former employer $1.6 million, which includes Morgan Stanley’s legal fees, costs and $196,000 in interest. In a similar case, on April 7, 2010 FINRA ordered a Las Vegas financial adviser to pay Citigroup Inc. $384,000 plus interest for leaving the firm before his signing bonus had been completely forgiven.