Facts

Charles Schwab & Co. Inc. filed a claim against Morgan Stanley Wealth Management and Morgan Stanley Smith Barney LLC, involving allegations of misappropriation of Charles Schwab's trade secret customer list and the diversion of its clients to Morgan Stanley.

CLAIMANT'S CONTENTIONS: Respondent allegedly acted intentionally and with malice in an effort to harm claimant and by engaging a non-party referred to as, Mr. Q, to commit said wrongful acts. Respondent also allegedly engaged in unfair competition; misappropriated and misused claimant's trade secrets; tortiously interfered and induced the breach of Mr. Q.'s agreement with claimant, including, without limitation to Mr. Q.'s obligations not to use or disclose confidential and trade secret information, not to unfairly compete with claimant, and to provide notice of his resignation; and in aiding, abetting, and inducing Mr. Q to breach his duty of loyalty to claimant.

RESPONDENTS' CONTENTIONS: Morgan Stanley denied the allegations and asserted various affirmative defenses.

Result

The FINRA Panel found Morgan Stanley liable to Charles Schwab in the amount of $360,000 in compensatory damages, $289,524 in attorney fees, and $600,000 in punitive damages all pursuant to the California Uniform Trade Secrets Act.

Other Information

ARBITRATORS: Cheryl Marie Allain-Mee, presiding chairperson, Ellen Joan Fenten, Robin Z. Mathes.