Morgan Stanley Claws Back $1.5-Mln Note in Dispute with Former D.C. Broker
(Updated to include additional detail from Satterfield’s CRD filing)
A 21-year industry veteran who left Morgan Stanley in January of last year has been ordered by a panel of Financial Industry Regulatory Authority arbitrators to pay back nearly $1.5 million in promissory notes, plus interest and fees, according to a stipulated award finalized last week.
Morgan Stanley, which had alleged breach of promissory notes, sought roughly $1.3 million plus interest on the first note and nearly $184,000 plus interest on a second note issued to Satterfield, according to the award letter published on August 5.
Like many major firms, Morgan Stanley pays top brokers signing offers structured as ‘forgivable’ loans that can reach three-times a brokers’ annual revenue, including back-end deferred bonuses, but also require them to stay at the firm for upwards of a decade before the loans are fully forgiven.
Morgan Stanley had $3.24 billion in employee loans outstanding as of the end of 2020, up 8.7% from $2.98 billion the year before, according to its 2021 annual report. The year-over-year balance increase was a side effect of the wirehouse’s reviving its hiring efforts since stepping back from the fray in 2017.
Satterfield had denied the firm’s allegations, countering that Morgan Stanley had wrongfully terminated him, further accusing the wirehouse of unlawful discrimination and retaliation in violation of statutory law. He had sought unspecified damages, reinstatement, back pay plus interest, and fees and costs. Morgan Stanley denied those counterclaims.
Satterfield, who has not registered with another Finra member firm since his exit from Morgan Stanley, could not immediately be reached for comment on the matter.
The broker’s D.C.-based attorney, Dave Scher at Hoyer Law Group, did not respond to a request for comment on the Finra outcome, Satterfield’s exit from Morgan Stanley, or if Satterfield plans to return to the brokerage industry.
A Morgan Stanley spokeswoman declined to comment for this story.
The three Finra panelists ordered Satterfield to repay Morgan Stanley $1,498,523.45 in compensatory damages, $137,765.23 in post-termination interest, and $259.59 interest per day from July 31, 2021 until all sums due are fully paid, according to the award letter.
Satterfield, whose counterclaims were all denied, is also on the hook for $182,643.11 in attorneys’ fees and costs pursuant to the terms of the promissory notes.
The parties on July 20 had reached a stipulation on the dispute, granted by the panelists on July 28, according to the award letter, which also said Morgan Stanley is not permitted to seek confirmation or further enforcement of the stipulated award before September 30 of this year.
Satterfield began his brokerage career in 1996 with PaineWebber Inc., where he remained until 1998, according to his BrokerCheck report. He next registered in 2000 with Merrill Lynch and in 2004 moved to UBS, according to the database. His Central Registration Depository (CRD) ‘Snapshot’ report, maintained by state securities regulators, indicated his exit from Morgan Stanley was voluntary.
Satterfield, a 1995 graduate of the University of Maryland College of Behavioral and Social Sciences, was recognized by the school in October 2016 for committing $1 million “in support of multiple initiatives in BSOS and Athletics,” including a $200,000 matching gift fund.
In other recent promissory note cases, a former Morgan Stanley broker in Sarasota, Florida was ordered in June to pay back nearly $600,000 in promissory notes following his January 2021 termination, while another former Morgan Stanley broker in Boca Raton was ordered in January to repay a $984,000 note balance tied to his July 2020 resignation.
Rival wirehouse UBS Wealth Management USA in a court filing last month said it had spent over $60,000 in legal fees as part of a promissory note dispute involving a broker who left the firm 16 years ago.