Morgan Stanley to Pay $642K Over ‘Unauthorized’ Apple Stock Sales
A Financial Industry Regulatory Authority arbitration panel ordered Morgan Stanley to pay an investor and two of her companies roughly $642,000 in compensatory damages and costs after she claimed the wirehouse sold her shares of Apple Inc. without authorization, according to an Aug. 2 award.
“She didn’t want to sell,” Wright said in an interview. “I think she wanted to pass it down to her children.”
The total included $482,000 in compensatory damages, $45,000 in attorney’s fees, $25,000 in brokerage fees and $83,000 in federal and state taxes. It also assessed another $5,000 in expert witness fees against the firm.
The panel, however, denied Rudnick’s claim for unspecified punitive damages.
A Morgan Stanley spokesperson declined to comment on the case, which Rudnick filed in October 2020 and with claims of breach of contract and duty of loyalty, unjust enrichment, and conversion. The claim did not name a broker as a party.
At the hearing, Morgan Stanley lawyers and a broker on the account acknowledged an operational error had occurred that triggered the sale of the Apple stock, according to Wright. It was likely due to an automated rebalancing of the portfolio, but Wright said Rudnick had written instructions on file to not sell the Apple shares.
Morgan Stanley fought the damage claims, however, because it felt it should not be liable for the amount that the stock had increased in price during the time it took Rudnick to raise concerns about the sale.
The arbitrators did not provide a written explanation of their decision, which would have to be requested by both parties prior to the award.