[ by Melanie Gretchen and Howard Haykin ]

A  former Morgan Stanley broker who lost an arbitration case against his former firm, is suing both the firm and FINRA Dispute Resolution in an effort to have an award vacated, along with other damages.  Mark Mensack lost an arbitration case and was ordered by the panel to pay his former employer $1.2 million. 

Yet, rather than comply with the order, Mr. Mensack has gone to federal court in New Jersey and is suing his former employer and FINRA.  In his complaint filed Friday, Mr. Mensack accused the firm of perjury and found fault with the industry's arbitration hearing process that resulted in the award against him.

Respondent's Employment with Morgan Stanley.   Mr. Mensack, who worked for Morgan Stanley from August 2008 to November 2009, said he was forced to leave the firm after he discovered an illegal "pay-to-play" scheme involving 401(k) assets that the company administered.  In March 2010, he filed a whistleblower suit in New Jersey Superior Court against Morgan Stanley. 

Seventeen months later, in August 2011, Morgan Stanley won a "breach of contract" arbitration claim against Mr. Mensack.  The panel of arbitrators decided that Mensack had failed to repay money a sign-on bonus after he left the firm, and issued Morgan Stanley a $1.2 million award.

"The arbitration panel gave them fair consideration and rejected them in their entirety.  They correctly concluded that his claims did not excuse his loan obligation, and ordered Mr. Mensack to re-pay it, along with Morgan Stanley's attorneys' fees." -- Morgan Stanley, in a statement on Friday.

Since then, Mr. Mensack has filed for bankruptcy and claims to have suffered from "severe emotional and physical distress," as well as financial damage - largely his obligations arising from the arbitration case - the $1.2 million award plus "extensive" attorneys fees and costs during the proceedings.

Following the close of the arbitration case, Mark Mensack claims that he sought to review testimony from the arbitration hearings in preparation for a possible appeal of the award.  What he found, he says, is that roughly 8 hours of testimony were "destroyed, never recorded or were otherwise missing and unavailable."   His 31-page complaint, which includes 16 counts, details a list of accusations against Morgan Stanley and FINRA Dispute Resolution, ranging from ethical violations to impartiality.

"It's an indication of injustice in the system." -- Mr. Mensack, now seeking a trial by jury.

[C-I Note:   Individuals like Mr. Mensack can refuse to let go of a case and yet, somehow, they find the money to pay for appeal after appeal - or they find lawyers who may be willing to work for peanuts.  C-I is not familiar with this case, but oftentimes it's best to "cut one's losses and move on with life."   We hope the matter is resolved amicably and appropriately.]

For further details, go to [Reuters, 2/22/13].