Facts

Morgan Stanley Smith Barney LLC and Morgan Stanley Smith Barney FA Notes Holdings LLC filed a claim against Harvey Klyce in connection with his former employment with Morgan Stanley. Klyce, in turn, find a counterclaim against Morgan Stanley.

CLAIMANTS/COUNTER-RESPONDENTS' CONTENTIONS: Respondent allegedly breached the terms of a promissory note respondent executed in 2013. Claimants denied the allegations made in respondent's counterclaim and asserted various affirmative defenses.

RESPONDENT/COUNTER-CLAIMANT'S CONTENTIONS: Respondent denied the allegations and asserted various affirmative defenses. In his counterclaim, respondent asserted causes of action for violation of the Uniformed Services Employment and Reemployment Rights Act, violation of the California military leave laws, violation of Labor Code Section 970, breach of public policy, breach of contract, misrepresentation, fraud in the inducement, and promissory fraud.

Damages

Morgan Stanley sought $286,000, representing the principal balance due and owing, plus interest as well as attorney fees and costs. In his counterclaim, Klyce sought $9 million in damages, the note be converted into a bonus, reduction of amounts due on the note, lost wages and benefits, and other relief.

Result

The FINRA Panel found Klyce liable to Morgan Stanley in the amount of $323,353 in compensatory damages plus interest, $175,000 in attorney fees, and $14,318 in costs. The Panel denied Klyce's claims in their entirety.

Other Information

ARBITRATORS: Herbert F. Schwartz, presiding chairperson; Shawn Ridgell; Timothy P. Bogan.