In November, the Financial Industry Regulatory Authority (“FINRA”) ordered Stephen Todd Walker (“Walker”), a former Morgan Stanley (“MSSB”) Advisor, to pay approximately $2 million to cover remaining promissory note balances and arbitration costs (the “Award”). Promissory note cases can be difficult to win, as the contractual language stipulating terms of repayment is typically very explicit as to the obligations of the promissory note holder.
MSSB terminated Walker in 2010, and he left for Oppenheimer with a large book of business and a small team of Financial Advisors and Assistants. MSSB promptly sued Walker for breach of his promissory note agreements, with MSSB seeking repayment of the $1.67 million balance. Walker filed counterclaims against MSSB for “tortious interference” with his client relationships, unfair competition, improper conversion of property, and defamation, that sought damages of $52 million. The suit culminated in 160 pre-hearing and hearing sessions between 2011 and September 2017.
After a protracted 7-year arbitration battle, a three-person FINRA Arbitration Panel (the “panel”) ruled that Walker must pay $1.67 million in promissory note balances back to the firm, and pay $301,000 in attorneys’ fees (prevailing party attorneys’ fees can be contractually stipulated in promissory note agreements). The Panel did however grant Walker $525,000 in compensatory damages from MSSB, making his total outstanding liability from the Award $1,446,000.