Widow of HSN Founder Files Suit against Morgan Stanley

Morgan Stanley has found itself on the wrong end of a Florida FINRA arbitration for claimed damages of $400 million. Lynnda Speer, the widow of Home Shopping Network (HSN) co-founder Roy M. Speer, filed the claim against Morgan Stanley and one of its branch managers and investment advisers. Due to its size, the firm acknowledged the claim in a disclosure in its annual financial report filed with the Securities and Exchange Commission (SEC) in March.

In addition to being the widow of Mr. Speer, Ms. Speer is the personal representative of his estate. In her claim, filed with the Financial Industry Regulatory Authority (FINRA), she alleges excessive trading, negligent supervision, and unjust enrichment. According to a SEC filing, the claims also include that Morgan Stanley and the adviser, working out of Palm Harbor, Florida, engaged in the unauthorized use of discretion and abused their fiduciary duty.

After helping to create the popular HSN, it was estimated by Forbes that Mr. Speer was worth $775 million in 2002. Before passing away in 2012, Mr. Speer suffered from “significant diminished capacity” during the later years of his life. It is alleged that during the final five years of his life, his adviser, Ami Forte, and the firm conducted roughly 12,000 unauthorized trades, which generated around $40 million in commissions. Also named in the suit is the Morgan Stanley branch manager, Terry McCoy.

In a statement by Ms. Speer, she said, “I am committed to seeking justice for the exploitation of Roy and for the damages suffered by Roy’s charitable foundation and the Speer family trust.”

While Morgan Stanley acknowledged that a suit had been filed against it, the firm indicated that the damage amount claimed was approximately $170 million. According to the Morgan Stanley filing, Ms. Speer has asked for $78 million in damages for violating the Florida statute that governs securities transactions. In addition, the firm indicated that she was seeking portfolio damages of between $55 million and $66 million, as well as disgorgement and excess commission damages of between $37 million and $44 million.  Elder financial abuse cases are on the rise.  Florida is home to a large retirement community and we have seen many cases involving allegations of abuse and advisors having close personal relationships which can cause a conflict of interest.

The securities arbitration claim filed with FINRA is expected to move quickly.  The process for the dispute between Ms. Speer and Morgan Stanley, which began in January of this year, is expected to conclude within 18 months. More specific information is not available at this time, as only the final ruling, and not the complaint, is made available to the public by FINRA.

Help with FINRA Claims

FINRA arbitration provides an often less expensive and faster way to resolve disputes related to broker or adviser misconduct. While this process differs in many ways from traditional litigation, it is often still important to speak with an experienced securities law attorney. At the Silver Law Group, we specialize in FINRA arbitration and would be happy to use that expertise to help you.