Broker Prevails on Defamation Claims Against Morgan Keegan

Former Morgan Keegan broker Alejandro Rotundo was awarded $500,000 by a Financial Industry Regulatory Authority (“FINRA”) arbitration panel on his counterclaim for defamation against his former firm Morgan Keegan.

Rotundo was a broker in Morgan Keegan’s Coral Gables branch office from December 2006 until he was terminated in September 2010.

The Statement of Claim filed by Morgan Keegan with FINRA in October 2010 alleged that Rotundo owed monies to Morgan Keegan under a promissory note, breached his employment contract, and sought indemnification from Rotundo for $489,230 paid to one of his clients to settle claims that Rotundo made unauthorized trades in the client’s account. Rotundo countered with claims that Morgan Keegan wrongfully terminated and defamed him.

Morgan Keegan alleged that Rotundo was terminated after one of his clients claimed that he had made unauthorized trades in the customer’s account. Morgan Keegan paid the client close to $500,000 to settle the allegations regarding the unauthorized trades. Rotundo claims that the client had authorized the trades and after his termination, Morgan Keegan defamed him so that his customers would not follow him to his new firm.
According to the FINRA Award, the arbitrators ordered Rotundo to pay Morgan Keegan $13,370 on the promissory note, $720 in costs, and $214,315 as his contribution to the settlement amount previously paid to Rotundo’s customer.

In addition to the $500,000 defamation award, the arbitrators instructed Morgan Keegan to change the reason for Rotundo’s termination on his CRD, from “unauthorized trading” in a customer’s account to “exercising discretionary power in a customer’s account without prior written authorization.” After the setoffs, the net award to Rotundo is $271,595.

Morgan Keegan has since moved to vacate the FINRA award.