A former Morgan Stanley financial adviser has filed a lawsuit against the company claiming she was ostracized and treated differently after reporting financial improprieties.
In her whistleblower lawsuit, filed Friday in New London Superior Court, 62-year-old June Strunk claims upper management at Morgan Stanley’s Mystic branch ignored complaints about alleged investment improprieties, and punished her for reporting them. Strunk, who was with the company for 18 years, was constructively discharged in May 2017.
Part of Strunk’s job involved reporting conduct she believed violated U.S. securities laws.
Strunk’s lawsuit claims her whistleblower complaints were handled under the previous leadership of Catherine Galgano, then-complex manager for the Mystic branch. That changed when David Swartz assumed Galgano’s role in 2016.
The lawsuit gives numerous examples of Strunk flagging alleged irregularities to Galgano and then Swartz.
One example was when Strunk complained to Galgano about David Volpe, a vice president and financial adviser, and financial adviser Robert Tassone over concerns she had about a transaction involving an elderly client. According to the lawsuit, Strunk says she noticed questionable behavior by Volpe and Tassone related to the sale of the client’s mutual funds.
“The funds were of low value, which resulted in clients paying maximum commission charges. … Mrs. Strunk believed that this practice violated federal securities laws because she believed that they violated fiduciary obligations,” the lawsuit claims.
Swartz, who supervises 13 Morgan Stanley branches and is based out of Wellesley, Massachusetts, met with Strunk in July 2016, soon after assuming his new role.
“Without any basis or specific examples, he informed her that financial advisors in the Mystic branch were complaining about her,” the lawsuit said. “Mrs. Strunk became concerned that Mr. Swartz would not be as receptive and diligent as Ms. Galgano had been to reporting of possible compliance, legal and ethical breaches.”
The lawsuit goes into great detail describing numerous examples of alleged misconduct that Swartz allegedly didn’t address.
According to the lawsuit, “Mrs. Strunk found herself in the crosshairs of an escalating harassment campaign” against her. The lawsuit states Strunk was also shunned by colleagues.
In addition, Strunk, who had received bonuses under Galgano, was not awarded a bonus under Swartz, according to the lawsuit.
Robert Mitchell of Mitchell & Sheahan in Stratford, one of Strunk’s attorneys, said she is seeking more than $1 million in compensatory and punitive damages. Strunk is also represented by Maria Garcia-Quintner.
There appears to have also been post-termination retaliation, Mitchell and the lawsuit claim. After leaving Morgan Stanley, Strunk joined Janney Montgomery Scott, also located in Mystic, as a financial adviser. Morgan Stanley, Janney and other financial firms have participated in the Protocol for Broker Recruiting, which allowed brokers to take clients with them from their previous jobs if they followed proper procedures under the protocol, according to the lawsuit.
About a year after Strunk left the company, Morgan Stanley withdrew from the protocol. Other financial institutions have also withdrawn from the protocol.
Mitchell said Wednesday “there is no direct evidence [Morgan Stanley] went after her, just circumstantial evidence based on the timing of when she reported what she reported and how they treated her.”
No one from Morgan Stanley’s corporate communications division in New York City responded to a request for comment. In addition, neither Swartz, Volpe nor Tassone responded to a request for comment Tuesday.