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Morgan Stanley Ordered to Pay $500K to former Broker

Morgan Stanley Ordered to Pay $500K to former Broker

Late last week, a  Financial Industry Regulatory Association (FINRA) arbitration panel awarded a former Morgan Stanley registered representative $500,000 in a dispute over what Morgan Stanley alleged was the broker’s breach of promissory note. In December 2012, Morgan Stanley claimed the former rep, John Offenburger, breached a promissory note agreement that the investment house was due in full if the broker left the firm.  

In the arbitration pleadings, Morgan Stanley stated Mr. Offenburger was terminated on Oct. 5, 2012, and the note balance was therefore due. However, their former employee refused to pay. In their FINRA arbitration claim, Morgan Stanley sought $519,131.98 in principal plus interest, costs and attorneys’ fees for litigating the arbitration case. In response, Mr. Offenburger filed a counterclaim in April 2013, denying the firm’s claims and alleging a variety of accusations against Morgan Stanley, including breach of contract, fraudulent or negligent presentations, defamation and tortuous interference with business relations . The former rep also claimed that he was forced to resign and that Morgan Stanley’s agents made “false and defamatory statements” about him to his clients.  He pled damages of $1,395 million in his counterclaim. 


 In the subsequent award, the FINRA arbitration panel denied all of Morgan Stanley’s claims, stating “that the promissory note was unenforceable and no fraud was proven.” Further, the arbitration panel awarded Mr. Offenburger $500,000 for his counter claim of lost income. The panel decided that Morgan Stanley’s promissory note to the former rep satisfied the award, meaning the $500,000 due was paid in full or essentially was a wash.


The experienced securities fraud attorneys at Colling Gilbert Wright have successfully represented registered representatives in breach of promissory note, tortuous interference with business relations and defamation. investors.  If you have suffered losses as a result of a termination from your firm, please contact us for a free case evaluation