Arbitration Discovery Fund - Morgan Stanley & Co.
This case is closed. You may review eligibility and related claims information for reference only.
FINRA recently took disciplinary action against Morgan Stanley & Co. Inc. (Morgan Stanley), the successor of Morgan Stanley Dean Witter (MSDW), for MSDW's failure to produce pre-September 11, 2001 email and updates to a supervisory manual to certain arbitration claimants during discovery. As part of a settlement of this action, a $9.5 million fund has been established to pay certain arbitration claimants. As described more fully below, and in the FINRA Letter of Acceptance Waiver and Consent , the settlement applies to investors who brought and completed certain arbitration cases against MSDW. Remediation is expected to be completed by early 2009. A Fund Administrator has been selected to handle customer inquiries. Phone inquiries may be directed to Bradley Skolnik of the Indianapolis law firm of Stewart & Irwin, (317) 639-5454.
Who is eligible for fund payments?
Customers or former customers who brought arbitration claims against MSDW who fall into one or both of the two groups described below:
Email Claimants: Customers who brought arbitration cases against MSDW in any arbitration forum that were either (a) still pending on September 11, 2001, or brought after September 11, 2001, and (b) which were resolved or closed by June 20, 2005, may be eligible for payment due to the firm's failure to produce pre-September 11, 2001 email.
Cases that were still open after that date are not part of this settlement. Cases must have been brought by customers of MSDW. The settlement does not cover claims relating to employment disputes by MSDW employees or cases in which MSDW was the claimant.
Supervisory Manual (MAPPS Manual) Claimants: Customers who brought cases against MSDW in the NASD (now FINRA) arbitration forum on or after July 1, 1999, that were closed by December 31, 2005, and who did not receive required updates to the firm's supervisory procedures manual, may be eligible for payment.
The case must have been brought by customers of MSDW. The settlement does not cover claims relating to employment disputes by MSDW employees or cases in which MSDW was the claimant.
What do claimants have to do to participate in the settlement?
The Fund Administrator will send a notice to the eligible claimants, providing them with specific instructions and forms. General participation guidelines and additional participation information for claimants in the two groups described above are as follows:
If you are in this group, you will have the opportunity to accept an estimated payment of $3,000-$5,000 (Standard Payment), subject to the availability of funds, without getting copies of email, or having Morgan Stanley look for and produce remaining pre-September 11, 2001 emails that were not produced during the arbitration. Alternatively, you can get the emails, and then decide whether to:
- Accept the Standard Payment; or
- Ask the Fund Administrator to review your closed arbitration case, by reviewing certain documents pertaining to the case, and the newly-produced email, and independently decide how much you should receive, up to a maximum of $20,000.
Note: If you choose to have the Fund Administrator perform a review, you face the possibility of getting less than Standard Payment, or receiving no payment.
If you want to receive the Standard Payment, you would fill out the form with that choice, and sign a waiver (see below). You will receive an initial payment in approximately two months, with any additional payment made at a later date, if there are funds available for such payments, after the claims process is complete. If you choose to have Morgan Stanley search its records for any pre-September 11, 2001 emails that are still available, you will not receive the initial payment described above while that request is pending. But if, having reviewed the emails, you elect to receive the Standard Payment, you will be able to receive the same amount of money at a later time.
How to Get Copies of Pre-September 11 Emails
- You may request email. If so, you will be asked to provide certain information, including your email address during the time period related to the arbitration claim, your account number(s), and the name(s) of your MSDW broker(s) or Financial Advisor(s). Morgan Stanley will also be asked to provide this information. Morgan Stanley will search its email records for emails to, from, or referring to you (by full name or account number), and will search for any emails to or from your registered representative containing your last name.
- You may request that Morgan Stanley search for emails using other search terms or criteria. The Fund Administrator will decide whether to use those search terms or criteria by deciding if they are reasonably designed to obtain emails that could have been relevant to your arbitration case. Morgan Stanley may object to any such request, and you may respond to the objection.
- Once the emails are provided, you may request a second search using terms or criteria they specify, if allowed by the Fund Administrator. Again, Morgan Stanley may object to any such request, and you may respond to the objection.
- Morgan Stanley may, on a case-by-case basis, ask that you enter into a confidentiality agreement before it turns over emails. However, before that may occur, Morgan Stanley must convince the Fund Administrator that there is good cause to require you to keep emails confidential. You may oppose any such request by Morgan Stanley. Even if you enter into a confidentiality agreement, you can still use any emails provided by Morgan Stanley to seek additional compensation from the Fund Administrator, as described below.
What Claimants Can Do Once They Get Emails
- Once you get the emails, you can elect to receive the Standard Payment as described above.
- Alternatively, you can ask the Fund Administrator to decide how much to award you, based on the emails and the facts and circumstances of each case, up to a limit of $20,000, subject to the availability of funds. The Fund Administrator will review the new emails as well as documents pertaining to the underlying arbitration proceeding, and determine how much, if anything, should be awarded. The Fund Administrator will consider, among other things, the content of the emails, the number of such emails produced, the significance of the emails to the claims in the arbitration, and any findings in the arbitration. Claimants who seek this should be aware that:
- When you choose to ask the Fund Administrator to award a higher amount, under the process described above, you give up the right to automatically receive the Standard Payment described above.
- The amounts set by the Fund Administrator under this process may have to be reduced if there is not enough money in the claims fund to pay all of the amounts determined by the Fund Administrator.
- The Fund Administrator may decide not to award anything in a specific case.
Waiver of Certain Rights
- Claimants who accept payments will be required to waive the right to bring a separate case against Morgan Stanley seeking further punishment for the failure to produce the pre-September 11, 2001 email. This does not preclude you from trying to bring other cases or assert other claims based on the failure to receive email; however, the ability to do so involves legal issues, and you may wish to discuss those issues with an attorney.
Supervisory Manual (MAPPS Manual) Claimants
To participate in the settlement, you will have to certify that you did not receive the updates to the MAPPS Manual related to your case during the arbitration proceeding, or that you have made efforts to find out whether you did and cannot obtain that information. This can be done in one of three ways:
- If you were represented by a lawyer in the arbitration, you can have the lawyer sign a form stating that he or she did not receive the updates.
- If you represented yourself, you can sign a form stating that you did not receive the updates.
- If you cannot provide either of these certifications, you will be required to explain what you did to try to obtain the certification and why you were not able to do so. The Fund Administrator will determine whether you are eligible to receive payments.
Qualifying claimants will receive an initial payment approximately two months after providing the certification. This amount is expected to be $1,500, but is subject to the availability of funds. Qualifying claimants will receive any additional payment, up to $1,000 more, if there are funds available for such payments, after the claims process is complete.
Waiver of Certain Rights
- Claimants who accept payments will be required to waive the right to bring a separate case against Morgan Stanley seeking a discovery sanction as a further punishment for the failure to produce the updates. This does not preclude you from trying to bring other cases or assert other claims based on the failure to receive the MAPPS Manual updates; however, the ability to do so involves legal issues, and you may wish to discuss those issues with an attorney.