Clifford Jagodzinski, a former complex risk officer at Morgan Stanley Smith Barney, the bank's wealth management arm, sued Morgan Stanley in federal court on Wednesday, alleging that the firm violated the Dodd-Frank Act by firing him in April 2012 for being a whistleblower.
Jagodzinski worked at the wealth management firm for six years. He is demanding his job back, at least $1 million in compensation and payment for legal fees.
Morgan Stanley plans to fight the lawsuit in court. "We believe the complaint is without merit and we intend to vigorously defend ourselves," Christine Jockle, a spokeswoman for Morgan Stanley Smith Barney, said in a statement.
Jagodzinski alleges that between December and April of this year, his supervisors repeatedly ordered him not to report or investigate illegal trades that cost clients money. In early April, he said that the trades should be reported to the independent securities regulator FINRA. He then was fired on April 13.
According to Jagodzinski's lawsuit, he told his supervisors in December that a new wealth manager at Morgan Stanley Smith Barney, Harvey Kadden, was making trades that generated tens of thousands of dollars in commissions but often made clients lose money.
"These trades were obviously designed to bilk investors," the lawsuit said.
Jagodzinski says his supervisors at first applauded him; one told him, "Great job for catching this scam," according to the lawsuit. But because of the revenue Kadden generated, they later told Jagodzinski to stop investigating Kadden, according to the lawsuit.
Similarly, Jagodzinski discovered that another wealth manager, Bill Siegel, had made more than 80 unauthorized trades, which violated the law and to which Siegel admitted, according to the lawsuit. But Jagodzinski's supervisor, David Turetzky, told him not to investigate the case further.
Jagodzinski also reported unauthorized Treasury trades by financial adviser Michael Paisano and alleged drug abuse by an unnamed financial adviser, according to the lawsuit. But Turetzky ordered him not to report the unauthorized trades to the legal department or to investigate them further. Jagodzinski says he was fired after he finally suggested reporting the illegal trades to FINRA.
Jagodzinski, who does not indicate that he has a new job, alleges in the lawsuit that Morgan Stanley "besmirched" his reputation by claiming that they fired him for poor performance. The lawsuit says that all but one performance review indicated that he "exceeded expectations," and the only performance review that did not say so came in January, after Jagodzinski had blown the whistle.
The Dodd-Frank Act has given whistleblowers reason to become more confident about bringing their complaints into the open, since it prohibits company retaliation against whistleblowers.
But whistleblowers still are underdogs. When Mark Mensack, a former Morgan Stanley financial adviser, sued the bank for retaliating against him, Morgan Stanley sued him right back, demanding that he return a $750,000 bonus. Morgan Stanley was able to get the case moved to FINRA from New Jersey Superior Court and later won, forcing Mensack to pay back the bonus as well as the bank's legal fees and court costs, to the tune of $1.2 million total.
Below are people who were fired for less serious reasons:
In 2009, a female Dutch McDonalds employee was fired after she gave a colleague a cheeseburger instead of the cheaper hamburger that had been paid for, The Telegraph reports. A Dutch court ruled that the firing was too severe a punishment and ordered McDonald's to pay the ex-employee the full salary for what were the remaining five-months on her contract, as well as legal fees.
Stephanie Cannon was fired from her reception job at the Frauenshuh Cancer Center of Park Nicollet Health Services on the grounds that she smelled like smoke at work, KSTP-TV reports. Cannon is a regular, pack-a-day smoker who told the local ABC affiliate that she never brought her habit with her to work.
Home Depot fired Judy Henderson in 2010 after she told the company that she would extend her sick leave because of a cancerous tumor. The company agreed to pay $100,000 to Henderson, who had worked at Home Depot since 1997.
Wells Fargo fired Richard Eggers from his job of nearly 7 years in July after discovering that he was caught putting a cardboard cutout of a dime in a laundromat washing machine nearly 50 years ago.
Former Tuesday Morning CEO Kathleen Mason claimed that she was fired from her position after she disclosed to the company's board that she has cancer. One board member even allegedly made fun of Ms. Mason's wig. Her charges are being taken to court as she sues her former employers for damages and reinstatement.
Philadelphia Eagles stadium operations worker Dan Leone was fired after he updated his Facebook status criticizing Eagles management for trading Brian Dawkins in 2009, CNET reported. Mr. Leone allegedly posted this: "Dan is ******* devastated about Dawkins signing with Denver...Dam Eagles are Retarded."
In 2007, New Zealand resident Vicki Walker was fired from her job for sending emails in bold, red-underlined all-caps fonts, Fox News reports. Walker was laterawarded $17,000 for wrongful termination.
Barista Christopher Cristwell was fired by Starbucks after he took his pent-up anger out on Youtube, The Daily Mail reported. Known as "The Starbucks Rant Song," Mr. Cristwell told his internet viewing audience that cappucino lovers were "the worst of all." A spokesman for Starbucks stated: 'While Christopher was expressing his own views in the video, the disparaging remarks about our customers and company are unacceptable and out of line with our commitment to our customers and partners (employees).'
Ronald Kratz II was fired from his job as a parts sorter after his employer determine that it interfered with his job performance, Fox News reports. Following his dismissal, Katz filed a complaint with the Equal Employment Opportunities Commission and lost over 300 pounds.
Russian newsreader Tatyana Limanova was let go after she gave President Obama the finger on live television, The Telegraph reports. Limanova claims that the gesture was just a misunderstanding rather than an insult towards the leader of the free world.