An arbitration panel has awarded the former manager of Salomon Smith Barney's branch in Providence, R.I., more than 1.9 million dollars in damages.
Branch manager Richard Morsilli says he was ousted in April 1998 after SSB officials told him they were receiving phone calls (through an employee hotline) complaining that he favored male brokers when distributing accounts and leads."Our view was that [the sex discrimination charges] provided a convenient excuse to get rid of him," says William Jacobson, Morsilli's attorney and a partner with the Providence law firm of Kaplan & Jacobson.
The sex-discrimination accusations against Morsilli were leveled shortly after Morsilli started working for a new regional manager in the fall of 1997, Jacobson says. The new regional boss wanted to replace the 56-year-old veteran with a younger manager, Morsilli said in his 3 million dollars arbitration claim, filed in May 1998. Morsilli alleged wrongful termination, age discrimination and defamation. He was replaced by a 34-year-old manager.
Morsilli was fired just as SSB was close to settling a troublesome class-action claim spawned by the famous "boom boom" room incident. Jacobson claims SSB used the sensitive atmosphere at the firm to its advantage in firing Morsilli.
"I had been in the business 32 years and had a great track record," Morsilli tells RR. "It would have been very easy to settle this thing, but I felt clearing my name was the most important thing I could accomplish."
After 19 days of arbitration hearings, held from January through August 1999, the three-member NYSE arbitration panel ruled in favor of Morsilli, ordering SSB to pay 1.9 million dollars "as an award on the claim," the award summary states. The panel ordered the firm to pay 35,745 dollars in costs and the entire 38,000 dollars in forum fees.
Jacobson says "virtually the entire professional staff of the branch" testified on Morsilli's behalf. In fact, 19 reps in the office signed an April 1998 letter to SSB retail chief Paul Underwood pleading for Morsilli's return.
Morsilli, a former chairman of the Rhode Island Ethics Commission who opened the Providence branch for Drexel Burnham Lambert back in 1980, says he plans to get back into the retail securities business.
SSB officials threatened to appeal, but paid the award in October, Jacobson says. The firm declined to comment on the case.
Attorney William Jacobson, who represented former SSB branch manager Richard Morsilli in his 1.9 million dollar victory over SSB, says the firm's lawyers consistently "argued that the arbitrators had no authority to award punitive damages. ... They argued all along that their internal policy prevails."
As previously reported in RR, SSB's employee handbook states that arbitrators cannot award punitive damages, except where expressly provided for by statute. Jacobson says he was seeking unspecified punitive damages in the Morsilli case.
But after the NASDR questioned the legitimacy of SSB's policy, the firm agreed in June to defer to NASD rules (see August 1999 RR, Page 33). NASD and NYSE arbitration codes do not limit the awards arbitrators can make.
SSB officials would not say how SSB would prevent such positioning by its lawyers in the future. But it did reiterate the fact that the policy has been amended and is pertinent in all arbitration forums.
Late last year, the NASD sanctioned several firms for another attempt to limit damages (see April 1999 RR, Page 38). Merrill Lynch, Bear Stearns and Biltmore Securities were fined for arguing in arbitration hearings that so-called "New York choice of law" clauses in their customer agreements prohibited the award of punitive damages, per New York law.
Meanwhile, the industry is lobbying for a rule that would cap punitive damages in customer cases. The controversial rule has been amended several times and is now pending approval at the SEC.