Clifford Jagodzinski, formerly of Morgan Stanley Smith Barney LLC (MSSB), claims he was fired for blowing the whistle on one of the firm's newest wealth managers, Harvey Kadden. According to the complaint, filed in U.S. District Court in the Southern District of New York, Kadden “was flipping preferred securities in a manner that was generating tens of thousands of dollars in commissions but causing losses or minimal gains for his clients and exposing (them) to unnecessary risks.”
Harvey Kadden, who was with Merrill Lynch for 30 years, listed regularly on the Barron's Top 1,000 advisers list, joined MSSB October, 2011. According to the lawsuit, he received a $25 million guarantee for signing on.
“Consequently, [fusion_builder_container hundred_percent="yes" overflow="visible"][fusion_builder_row][fusion_builder_column type="1_1" background_position="left top" background_color="" border_size="" border_color="" border_style="solid" spacing="yes" background_image="" background_repeat="no-repeat" padding="" margin_top="0px" margin_bottom="0px" class="" id="" animation_type="" animation_speed="0.3" animation_direction="left" hide_on_mobile="no" center_content="no" min_height="none"][MSSB] had very significant earnings expectations for Harvey Kadden and did not want to take any steps to jeopardize his book of business,” the complaint alleges. Mr. Jagodzinski was thus “told to stop investigating Mr. Kadden,” according to the complaint.
The Dodd-Frank Act prohibits retaliation against whistle-blowers, according to the complaint filed by Mr. Jagodzinski.
Harvey Kadden manages assets in excess of $1 billion.
MSSB acknowledged that Mr. Jagodzinski was asked to investigate certain trades in customer accounts served by Harvey Kadden's team and that he had discussed those trades with his superiors. The firm, however, denied the other allegations.
From December 2011 to April, when he was fired, Mr. Jagodzinski reported several violations by brokers. They included improper trades of Treasuries by another MSSB employee, the failure of some of the firm's brokers to register home offices as alternate work locations and drug abuse by one of the firm's brokers.
“Finally, during a conversation during the week of April 4, Mr. Jagodzinski told Mr. Turetzky (his superior) that these violations should be reported” to the Financial Industry Regulatory Authority Inc., according to the complaint. “Mr. Turetzky bristled at this declaration, and less than 10 days later, Mr. Jagodzinski was fired.”
If you were a client of Harvey Kadden of MSSB, or another broker who may have been churning your accounts, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website and complete our online form at: https://www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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