Morgan Stanley, Veteran Broker Dinged $800k Over Amazon Short
A panel of arbitrators ordered Morgan Stanley and a 30-year veteran broker in New York City to pay an Israeli company nearly $800,000 in damages over shorted Amazon stock and other “improper” trades made in its account, according to an award finalized this week.
Shapira, a financial advisor whose other titles at Morgan Stanley include international client advisor, portfolio manager and alternative investments director, according to his biography on the firm’s website, declined to comment when reached at his office Wednesday.
The three-person all-public panel granted Mikedmat Dena $782,278.90 in compensatory damages, far less than the $3,116,803 in compensatory damages and $12,467,212 punitive damages it sought after the conclusion of the evidentiary hearing, which was conducted over eight video conferences in March, according to the Finra filing.
John Dellaportas, a New York City lawyer who represented Mikedmat Dena in the arbitration, did not respond to requests for comment. The client could not be reached for comment.
Mikedmat Dena had filed an original statement of claim in July 2020 and an amended statement of claim in February of this year, Finra said.
The damage claim represented “the minimum income that would have been generated on Claimant’s principal if the money had been properly invested,” plus rescission of the improper transactions, interest, attorney’s fees and arbitration fees, according to Finra.
In joint answers to the original and amended statements of claim, Morgan Stanley and Shapira requested denial of the claims against them in their entirety and denial of the relief sought by the customer, as well as expungement of all references to the arbitration from Shapira’s registration records.
However, the panel, noting that the respondents “did not specifically address the request for expungement in either the documents submitted, or the testimony provided,” declined to rule on the expungement request, the Finra filing said.
Morgan Stanley and Shapira, who were held jointly and severally liable for the compensatory damages, are also on the hook for the $13,050 in total hearing session fees, according to the award.
A Morgan Stanley spokeswoman declined to comment on whether the firm would take the rare step of appealing the outcome to a court, or pursue expungement on behalf of Shapira.
Shapira began his brokerage career in 1990 with Josephthal & Co. and has four other customer dispute ‘disclosures’ on his BrokerCheck report.
The most recent, a 2016 complaint seeking $425,000 in damages over purchases of Puerto Rican bonds was denied.
“All investment recommendations were made based on substantial due diligence and always with the client’s best interest in mind,” Shapira said in comment appended to the filing. No comment had yet been posted regarding the Mikedmat claim, which was still listed as pending on BrokerCheck.
Another from 2009 over unsuitable trading settled for $175,000 of the $437,000 sought.
In 2001, Shapira was accused of “extensive use of margin and highly speculative investments” that were unsuitable and unauthorized. The $2 million claim settled for $1.175 million, according to the disclosure.
Shapira and Josephthal in 1993 were found jointly and severally liable for $99,701 of a $100,000 claim, based on allegation the broker had made unsuitable and unauthorized trades in clients’ accounts.
In an unrelated case, which also included allegations about an options wager gone awry, a wealthy Iowa family brought a $23 million claim in February against UBS and a top broker in Wisconsin over Tesla short-selling recommendations that allegedly led to tens of millions in losses. The complaint is pending arbitration.