Boston, MA 08/28/2014 (wallstreetpr) – Charles Schwab Corp (NYSE:SCHW) lost an arbitration case worth $15 million against Morgan Stanley (NYSE:MS), in which the former had accused that MS recruited Schwab San Francisco branch brokers in an improper way. Schwab alleged that Morgan Stanley’s way of recruitment led to leakage of confidential information of their company through brokers. However, the 2-year long dispute came to an end after the ruling of Financial Industry Regulatory Authority arbitration panel.
Settlement of the Case
The arbitrators dismissed all claims of Charles Schwab Corp (NYSE:SCHW) and in the meanwhile, also ordered Morgan Stanley that it should make a payment of $72,000 in sanctions to Charles Schwab Corp. the panel of Judges did not explain the reasons of decision and neither did the ruling identify brokers who went from Charles Schwab Corp to Morgan Stanley (NYSE:MS).
What was the Dispute?
Charles Schwab Corp (NYSE:SCHW) alleged that Morgan Stanley (NYSE:MS) had maliciously organized actionable-raid of their San Francisco branch. Schwab also accused that MS induced its brokers in order to breach their contracts.
It is important to note that the claims which involve “raiding” are formed archetypically when a company loses 30-40% of the production from its branch office to another firm over shorter time duration. It is the amount equivalent to what is generated by the brokers in revenue on an annual basis.
Statement from Charles Schwab Corp and Morgan Stanley
Spokesman of the company said, “We strongly disagree with the panel’s decision and are evaluating our legal options in this situation.” He also added that the claims involved in this dispute were absolutely compelling, in which there were instances of stealing proprietary information and also manufacturing evidences. The spokesman added, “There were claims involving operating a steady raid on staff and clients resulting in significant damage to Schwab.”
In this context, when approached by CNBC, the spokesman of Morgan Stanley (NYSE:MS) did not comment or respond to Schwab’s statement.
