Morgan Stanley Ordered to Pay Over $34 Million to HSN Co-Founder’s Estate 

Ms. Forte had been Mr. Speer’s financial adviser since the late 1990s

An arbitration panel ordered Morgan Stanley to pay more than $34 million to the estate of deceased Home Shopping Network co-founder Roy M. Speer and his foundation, after Mr. Speer’s widow alleged there was excessive and unauthorized trading in Mr. Speer’s accounts.

In an arbitration claim with the Financial Industry Regulatory Authority, Mr. Speer’s widow, Lynnda Speer, had alleged that the actions of her late husband’s financial adviser, Ami Forte, and the firm’s Palm Harbor, Fla., branch manager, Terry McCoy, had caused them to breach their fiduciary duty.

According to Mrs. Speer’s attorney, Guy Burns, Mr. Speer was primarily a bond investor and Ms. Forte and Mr. McCoy “began very aggressive, rapid bond trading in his accounts.”

“The accounts were marginally profitable and generated significant revenues and commissions for the firm,” the lawyer said. In the years leading up to Mr. Speer’s death he suffered from “significant” diminished capacity, both physically and mentally, said Mr. Burns.

Ms. Forte had been Mr. Speer’s financial adviser since the late 1990s, said Mr. Burns, who alleged that she was also Mr. Speer’s mistress.

In an award document dated Monday, the arbitration panel found that Morgan Stanley, Ms. Forte and Mr. McCoy were jointly and severally liable on several claims, including unauthorized trading, churning, breach of fiduciary duty and negligence.

Both Ms. Forte and Mr. McCoy are still registered with Morgan Stanley, according to Finra’s BrokerCheck website. Neither responded immediately to requests for comment.

A spokesman for Morgan Stanley said the firm “is disappointed by the result and does not believe the award is justified.”

He added that “the award is inconsistent with substantial evidence showing that the accounts were profitable for the client and managed in accordance with his wishes.”

The arbitration panel awarded Mr. Speer’s estate $32.8 million in damages plus interest, along with $1.5 million in other costs, as well as attorneys’ fees, according to the award document. The estate had sought roughly $118.7 million in damages and nearly $356 million in punitive damages, plus other amounts. As is customary, the Finra arbitrators didn’t provide details on the reasoning for their decision.

“I am very pleased the arbitrators realized Ms. Forte and her colleagues at Morgan Stanley breached their fiduciary duties to Roy and his Foundation and exploited him during a time of his continuing mental and physical decline,” Mrs. Speer said in a statement.

Source: WSJ

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